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Citi Downgrades Humana to Sell on Valuation and New Strategy Concerns

Shares of the healthcare provider Humana Inc (NYSE:HUM) are slightly down in early trading as a result of a downgrade from Citibank. Humana was downgraded to sell from neutral, but the price target was maintained at $95 a share. Citi believes that Humana’s assumptions about the proposed base payment cuts to Medicare Advantage in 2015 will have more than a marginal effect on earnings than the current estimates from Humana. The reduction in Medicare Advantage rates according to Humana will only affect funding by 350-400 bpts. In addition, Citi doesn’t like Humana’s current strategy of focusing on growing membership instead of profit margins.