Humana Inc. is well-positioned to handle challenges posed in the next couple years as the health care overhaul unfolds, according to several analysts who cover the health insurer.

During the Louisville, Ky., company's meeting with investors Tuesday, the insurer focused on the value of its Medicare Advantage coverage, among other things, Leerink Swann analyst Jason Gurda said in a research note.

Medicare Advantage plans are privately run versions of the government's Medicare program for the elderly and the disabled. They make up a large portion of Humana's business compared to other insurers. Humana is the second-largest provider of Medicare Advantage plans, behind UnitedHealth Group Inc.

Gurda said in his note that he believes the stock is a bargain, and the insurer's earnings will grow faster than the earnings of peers that have a more diverse insurance product portfolio.

The health care overhaul aims to cover millions of uninsured people starting mainly in 2014, when the state-federal Medicaid program expands and many people become eligible for tax credits that will help them buy coverage. That will generate additional business for insurers, but the law also imposes a premium tax on the industry, it will limit how insurers price for risk, and it requires that they spend certain percentages of the premiums they collect on care or pay rebates to customers.

The overhaul also trims funding for Medicare Advantage plans, which have seen strong enrollment growth in recent years as baby boomers age and become eligible for them.

Humana should be able to balance these challenges with savings on medical and administrative costs, said BMO Capital analyst Dave Shove in a separate note. Humana aims to drop the cost for its Medicare Advantage coverage 15 percent below the government's cost for Medicare.

Humana on Tuesday backed its 2013 earnings per share prediction of about $8, not counting investment spending, said Bernstein analyst Ana Gupte in another note. She added that she got the impression that the company's forecast was conservative, and the insurer could top it next year.

The company said earlier this month it expected 2013 earnings to range between $7.60 and $7.80 per share, counting 30 cents per share in investment spending.

Analysts expect, on average, earnings of $7.90 per share, according to FactSet.


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