Guggenheim has reduced its price target for Humana Inc. to $252.00 from $312.00 while maintaining a Buy rating on the health insurer's shares. Humana is trading around $175.40 and remains near its 52-week low of $169.61. Market data cited by analysts indicate the stock may be undervalued relative to prevailing Fair Value estimates.
The firm attributed the price-target cut to an anticipated incremental $1 billion net Stars headwind for 2026, even though Humana reported a better-than-expected medical loss ratio for the fourth quarter of 2025. According to Guggenheim, the company’s forecasted 25% membership growth in 2026 complicates earnings-per-share expectations and helps explain the adjustment in the valuation outlook.
Guggenheim’s modelling suggests roughly a $3 swing versus the firm’s prior $12 EPS estimate for 2026, which the research shop breaks down as an additional $6 Stars headwind partially offset by $3 of improved core operational performance. Humana currently trades at a price-to-earnings multiple of 18.42, and analyst consensus price targets imply about 49% upside from current levels.
The research team acknowledged Humana’s demonstrated ability to generate Medicare Advantage core upside in 2025 despite a difficult reimbursement backdrop. Guggenheim also pointed to the company’s positioning to potentially deliver higher earnings as membership expands, and noted that the path the company takes into the 2027 rate environment will remain a subject of market debate.
The firm characterized the projected EPS ramp from approximately $9 to $17 as "not overly heroic," and said that successful execution against what it views as a conservative baseline for 2026 could create room for multiple expansion.
Other brokerages have also revised their views. Evercore ISI cut its price target on Humana to $180 from $260, maintaining an "In Line" rating; that move followed Humana’s guidance for 2026 EPS of over $9, which matches Evercore’s view but trails broader market expectations. Separately, Morgan Stanley downgraded Humana from Equalweight to Underweight and lowered its price target to $174, citing concerns about the company’s 2026 bid strategy and policy-related risks.
The backdrop to these brokerage changes includes a recent Medicare Advantage payment rate announcement from the Centers for Medicare & Medicaid Services. That notice projects a revenue change for 2027 of just 0.09%, well short of the roughly 6% many participants had anticipated. The CMS projection amplified concerns about reimbursement and growth, coinciding with a sector-wide selloff and a roughly 15% premarket decline in Humana’s stock price.
Piper Sandler and other market observers noted that the CMS notice implies lower-than-expected growth, a development that filtered through to the broader Healthcare Technology & Distribution sector and influenced investor positioning ahead of full-year results and guideposts.
Guggenheim had earlier reiterated its Buy rating with a $312 price target ahead of Humana’s fourth-quarter 2025 earnings report; the subsequent revision to $252 reflects the firm’s reassessment after factoring Stars impacts and membership changes into its 2026 baseline. The firm emphasized the potential for volatility as investors parse near-term guidance and policy signals.
Investors and analysts now face competing considerations: the incremental expense pressure tied to Stars adjustments and the company’s ability to convert an enlarged membership base into durable earnings growth. Those dynamics are central to how brokerages are recalibrating their earnings and price-target assumptions ahead of 2026 execution.