Humana's (HUM) targeted Medicare Advantage margin could be delayed to 2028, rather than 2027, given its Stars ratings miss last year, RBC Capital Markets said.

"We attribute much of Tuesday's intra-day weakness to a slight shift in narrative regarding

the path to Stars recovery and by extension the path to target 3% Medicare Advantage margin, which sounds incrementally more like a 2028 story," the investment firm said in a note Tuesday.

Humana's strategy to reach the 3% margin includes optimizing costs and achieving a normalized rate environment, which RBC noted would need to be stronger than what CMS initially proposed for 2026.

The company's management reiterated that they are focused on the 2025 measurement period, which would impact 2028 Stars, giving them a full-year runway for operational improvement.

The firm said it lowered its 2026 estimates for Humana due to its continued investment in clinical capabilities aimed at improving Stars ratings.

RBC maintained its outperform rating on Humana and its $283 price target.

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