Raymond James on Humana (HUM): 'Medicaid Fears Didn't Surface, and Core Guide Raise Better Than It Appears'

Raymond James analyst John Ransom reiterated an Outperform rating and $340.00 price target on Humana (NYSE: HUM).

The analyst comments "We are reiterating our Outperform rating and $340 price target on HUM following 2Q25 results that came in ahead of expectations as the company reported adj. EPS of $6.27 (Street: $5.92; RJ: $5.69) and an insurance MLR of 89.9% (Street: 89.9%; RJ: 90.0%). Management also raised its 2025 EPS guidance by $1.00 to $17.00, but the new guidance includes $100M of incremental investment spend as the company is accelerating some investments in Stars and back office technology. Absent the increased spending, the 2025 EPS guide would’ve been ~$17.60. We sense that the company will continue to spend down upside this year and accelerate any investments that will drive longer-term value. The company is not being valued on 2025 EPS and is on a longer-term margin recovery story, so if they can spend a few hundred million to recapture ~$2.2B of Stars money and other opex leverage, there is a strong potential ROI. Our longer-term model is largely unchanged here, but our 2026 EPS estimate is increasing to $11.00 (+$1.00), 2027 increasing to $21.00 (+$0.71), and 2028 unchanged at $40.00. We continue to like HUM as a relatively inexpensive way to play the MA recovery with the stock only trading at a ~6x P/E on 2028E EPS, mature margins, while UNH is trading closer to ~10x."

For an analyst ratings summary and ratings history on Humana click here. For more ratings news on Humana click here.

Shares of Humana closed at $247.26 yesterday.

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