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Investing.com -- Humana Inc. (NYSE:HUM) stock fell 3.2% Tuesday after the health insurer lost a second lawsuit aimed at reversing Medicare bonus payment cuts and received a sell rating from Goldman Sachs.
A Texas judge ruled in favor of the federal government, affirming a downgrade of quality ratings tied to Medicare Advantage payments. This decision threatens billions of dollars in potential revenue for Humana. The ruling follows a similar case dismissed in July on procedural grounds.
Adding to the pressure, Goldman Sachs analyst Scott Fidel initiated coverage on Humana with a sell rating and a $235 price target, substantially below Monday’s closing price of $271.
The analyst indicated that the Medicare Advantage recovery is not expected to play out uniformly across the industry in 2026. Fidel also noted a longer path to cyclical recovery in Medicaid and the healthcare exchange.
Medicare Advantage, a private version of the health insurance program for seniors, represents a significant portion of Humana’s business. The court’s decision to uphold the quality rating downgrades directly impacts the bonus payments the company receives through this program.
The dual headwinds of legal setbacks and negative analyst sentiment contributed to Tuesday’s share price decline as investors reassessed Humana’s near-term growth prospects.
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