Humana Stock Jumps. Why it Could be a Big Winner in Next Medicare Star Ratings.

Dow Jones
09/26

It's that time of year when Medicare Advantage insurers await a big announcement from the government: their eligibility for financial bonuses, known as star ratings.

Barclays estimates Humana is on track for a bump-and has upgraded the stock to Overweight from Neutral.

Barclays also lifted its price target for Humana shares to $515 from $407.

On Friday morning, Humana stock was up more than 8% to $411.93, outpacing the broader market, up 0.12%.

Medicare's bonus payments to insurers are meant to reward higher quality plans, drawing on dozens of measures that are translated to a 5-star rating system. Collectively the bonus payments are worth billions of dollars. This year the Medicare agency is expected to spend $13.4 billion on the bonus program, up from $12.7 billion in 2025, according to health policy research group KFF.

The stakes are high for Humana, after missing out on eligibility for certain bonus payments in 2026. Executives set their sights on recovering for bonus year 2028, based on the upcoming release of 2027 star ratings.

That ratings announcement is anticipated to come out around Oct. 8. Analysts see it as the next stock catalyst for insurers in the Medicare Advantage market.

Barclays is "increasingly constructive" on the view that Humana will be able to "flip several contracts to bonus status"-including a larger contract, H5216, which covers 2.4 million lives, or about one-third of Humana's total.

"This contract is the most critical component of the company's long-term 2028" earnings target, worth about $1.5 billion of EBIT, or earnings before interest and taxes, and $9 of earnings per share, wrote analyst Andrew Mok in a Friday client note.

Based on publicly available information at this stage, and Barclays own proprietary scoring framework, Mok sees a 75% probability that the H5216 is upgraded.

The insurer is entering the bonus year 2028 ratings cycle "in a much stronger position than it did a year ago," Mok wrote.

 

應版權方要求,你需要登入查看該內容

免責聲明:投資有風險,本文並非投資建議,以上內容不應被視為任何金融產品的購買或出售要約、建議或邀請,作者或其他用戶的任何相關討論、評論或帖子也不應被視為此類內容。本文僅供一般參考,不考慮您的個人投資目標、財務狀況或需求。TTM對信息的準確性和完整性不承擔任何責任或保證,投資者應自行研究並在投資前尋求專業建議。

熱議股票

  1. 1
     
     
     
     
  2. 2
     
     
     
     
  3. 3
     
     
     
     
  4. 4
     
     
     
     
  5. 5
     
     
     
     
  6. 6
     
     
     
     
  7. 7
     
     
     
     
  8. 8
     
     
     
     
  9. 9
     
     
     
     
  10. 10