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Investing.com - Raymond James has reiterated an Outperform rating on Humana (NYSE:HUM) with a price target of $340.00, following the stock’s approximately 12% decline on Tuesday. The healthcare provider, currently trading at $269.57, maintains a "Good" financial health score according to InvestingPro analysis, with the stock showing potential upside to its Fair Value.
The drop came after reports that the cut points for 2026 Stars Ratings, which will be officially announced in October, have become more challenging. This development potentially undermines hopes that Humana could regain some of its lost Stars Ratings for 2026, which would be ahead of management’s expectations. Despite recent volatility, InvestingPro data shows Humana maintains strong fundamentals with more cash than debt on its balance sheet.
Raymond James notes that Humana stock had rallied approximately 50% from its bottom before Tuesday’s decline, suggesting that improvements in Stars Ratings were increasingly being priced into the stock. The firm believes the stock "was getting a little ahead of itself" and views the recent pullback as "an attractive buying opportunity."
The investment firm calculates that Humana’s implied 2028 valuation now sits at approximately 6.7 times earnings per share. Even in a downside scenario where Humana regains no Stars Ratings over the next two years, Raymond James estimates earnings per share would be approximately $26, implying the stock is trading at about 10 times earnings.
Raymond James emphasizes that a Stars improvement was not incorporated into management’s long-term earnings framework and does not impact Humana’s ability to regain Stars in 2027, though it would improve visibility and accelerate some Stars earnings by one year. Trading at an EV/EBITDA multiple of 10x with a P/E ratio of 20.5x, the stock presents interesting metrics for value investors. For deeper insights into Humana’s valuation and growth potential, InvestingPro subscribers can access comprehensive analysis and 8 additional ProTips in our detailed research report.
In other recent news, Humana Inc . has announced the declaration of a quarterly cash dividend of $0.885 per share, payable on October 31, 2025, to shareholders of record as of September 26, 2025. This move underscores Humana’s ongoing commitment to providing value to its shareholders. Additionally, Humana has expanded its musculoskeletal care partnerships for Medicare Advantage, collaborating with Vori Health and HOPCo to enhance care for members with musculoskeletal conditions. These partnerships will offer coordinated care services to Medicare Advantage members, with Vori Health services available nationwide and HOPCo’s network serving members in Arizona.
Meanwhile, CenterWell Senior Primary Care, a division of Humana, received court approval to acquire the assets of The Villages Health, following the latter’s Chapter 11 bankruptcy filing. The transaction is expected to close in the fourth quarter of 2025. On the analyst front, RBC Capital has raised its price target for Humana to $322, maintaining an Outperform rating, citing updates to its model and insights from Humana’s recent quarterly results. In broader industry news, the U.S. government has fallen short of its hiring goal for medical coders to audit Medicare Advantage plans, which may impact the timeline for addressing potential overpayments.
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