Cantor Fitzgerald Upgrades Humana (HUM) to Overweight, 'A Strong 2027 Margin Year Bridges to an Inexpensive 2028 Multiple'

Cantor Fitzgerald analyst Sarah James upgraded Humana (NYSE: HUM) from Neutral to Overweight, $460.00 (from $300.00).

The analyst comments
We are upgrading HUM to Overweight from Neutral, raising our price target to $460 from $300, increasing '27 EPS to $17.96 vs. prior $15.86, and '28 EPS to $28.27 vs. prior $25.38. Our new estimates reflect higher confidence in Humana's Medicare margin and STARS recovery, ahead of the likely 10/9 CMS announcement on BY '28 Stars scores. Our increased confidence reflects recent conversations we had with large MA providers including HUM, and industry experts on STARS and bid strategy. It also factors in our updated view of cut points post the recent release. We see current multiples as undervaluing the 2Y improvement in MA margins. At $400, HUM trades at 9.9x the implied $40.45 mid-point of its '28 framework vs. an ~18x P/E over the last 3, 5, and 10 years. The next catalyst is the Bonus Year '28 Stars release later this week, and we believe it is likely to be a positive one based on our analysis of cut points and discussions with Stars KOL Melissa Smith. Following Stars, the potential catalysts will be establishment of '27 guide likely on 4Q26 earnings, and a confirmation that 2027 enrollment came in-line as expected, which could be released by the company in early-January or CMS (first look in January, more detailed/reliable look in February-March). We see HUM as well-positioned for two levers of MA margin lift in 2027 that could drive EPS to $11.73-18.86, suggesting potential for $0.90 upside to our newly raised estimates in the Bull Case Scenario. Jumping off at $9 ('26 guide), we estimate the company could add $0.87-4.46 from margin improvement in cohort '25 & earlier, and $1.87-5.40 from cohort '26."

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 $404.27 yesterday.

You May Also Be Interested In

• Freedom Broker Upgrades JPMorgan (JPM) to Buy, 'Greater Upside Potential'
• Mizuho: 'We remain positive on the optical roadmap with LITE, CRDO, TSEM, NVDA, and AVGO as key beneficiaries'
• JPMorgan Starts Praxis Precision Medicines Inc. (PRAX) at Overweight