Humana (HUM) Gets a Major Ratings Boost. Can Earnings Justify the Valuation?

Raymond James upgraded Humana to Outperform from Market Perform, setting a price target of $520. The stock has risen 11.56% in 5 days and 68.61% year-to-date, according to the article.

Raymond James upgraded Humana (HUM) to Outperform with a $520 price target, citing improved Medicare Advantage quality ratings and higher earnings estimates. The stock has risen 6.9% in a week, trading at $431.87. Other analysts, including Baird and Cantor Fitzgerald, also raised their price targets and estimates for Humana.

Moderna (MRNA) rose to a 4-year high after announcing an NIH partnership for cancer vaccines, with a $225 peak. Humana (HUM) reached a 2-year high after improving Medicare Advantage ratings to 95%. Lumentum (LITE) hit a record high due to strong AI infrastructure demand. MRNA +14%, HUM +11%, LITE +5%.

Humana's Medicare Advantage star ratings improved significantly for 2027, with 93% of members in plans rated 4 stars or higher, up from 41% in 2026. This could generate $3B+ in additional revenue in 2028, according to TD Cowen. Alignment Healthcare saw a major decline, potentially losing $170M in revenue. CMS changed its star ratings methodology for 2027.

Health-care stocks gained, led by Humana's 10% rise after it reported 95% of its Medicare Advantage members are in highly-rated plans for 2027, boosting profit outlook. UnitedHealth Group shares also climbed 3%.

Humana (HUM) shares rose 12% to $431.87 after announcing 95% of its Medicare Advantage members will be in 4-star or higher plans for 2027, which may boost CMS bonus payments. The company's GF Value™ suggests it is 13.2% overvalued, with a GF Score™ of 83/100. Insiders have been net buyers over the past year.