The brokerage lifted its price target on Humana to $330 but kept a ‘Neutral’ rating, citing lingering uncertainty over 2027 Medicare Advantage rates.
Bank of America (BofA) raised its price target on Humana to $330 from $312 on Tuesday, pointing to improved sentiment in the managed care sector following UnitedHealth’s preliminary Medicare Advantage Star Ratings update.
The bank’s research arm maintained a ‘Neutral’ rating on Humana shares, which rose on Wednesday following the worst one-day drop in over a year in the previous session after reports suggested that the cut points for the 2026 Medicare Advantage Stars Ratings, due for official release in October, will be more stringent.
Analyst Kevin Fischbeck said UnitedHealth’s stronger-than-expected ratings data prompted BofA to assign a higher peer multiple to Humana. However, he cautioned that uncertainty over 2027 Medicare Advantage rates could delay the company’s earnings recovery.
Meanwhile, analysts at Raymond James said the latest news about ratings “potentially pours cold water” on hopes that Humana could win back some of its lost ratings in 2026, a year earlier than management had guided. The research firm stated that the stock “was getting a little ahead of itself” following its surge from the year’s nadir in July. Still, Raymond James sees the pullback as a buying opportunity, reaffirming its ‘Outperform’ rating and arguing that Humana’s implied 2028 valuation now stands at just 6.7 times its earnings per share.
UnitedHealth said about 78% of its members are expected to be in plans rated four stars or higher for Star Year 2026, an improvement from last year and in line with historical averages.
The insurer reaffirmed its 2025 adjusted earnings outlook of at least $16 per share, on revenue between $445.5 billion and $448 billion, including its recent acquisition of Amedisys.
Wall Street analysts said the update was “better than feared,” even as tougher Consumer Assessment of Healthcare Providers and Systems (CAHPS) cut points raised the bar.
Truist raised its target on UnitedHealth to $365 from $310 with a ‘Buy’ rating, while JPMorgan and Barclays reiterated ‘Overweight’ calls, saying the disclosure should ease investor concerns. Leerink, which kept an ‘Outperform’ rating, said the performance was notable given that 58% of 2026 measures were tougher.
The preliminary disclosure, covering Star Year 2026 and Payment Year 2027, is a key driver of future Medicare Advantage reimbursements.
On Stocktwits, retail sentiment was ‘extremely bullish’ for Humana amid ‘extremely high’ message volume, while it was ‘bullish’ for UnitedHealth with ‘high’ volume.
So far this year, Humana’s stock has risen 8.6%, while UnitedHealth’s stock has declined 30.7% over the same period.
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