Humana (HUM) showed multiple levers to drive strong EPS growth by 2028 at its investor conference, focusing on long-term earnings growth against quick margin recovery, RBC Capital Markets said in a Tuesday note.
The report said the company pointed to 2028 EPS range of $38 to $42, inclusive of Stars bonus payments.
"While the EPS trajectory will not be linear due to Stars headwinds expected in 2026 and 2027, the company expects MA margins (excluding Stars) to improve through 2028," RBC said.
Humana is keeping benefits stable to limit member attrition instead of disrupting benefits in 2026 to help offset the margin headwind related to Stars, the report said. It said this would allow the company to build margin longer-term.
RBC also said Humana remains committed to the senior market, which serves as the foundation of its business.
RBC kept its outperform rating and its price target of $283.
Price: 242.83, Change: +7.44, Percent Change: +3.16
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