Guggenheim reiterated its Buy rating and a $312.00 price target on Humana ahead of the company’s fourth-quarter 2025 earnings release, which is due tomorrow. At the time of the note, the stock was trading at $189.49 - well below Guggenheim’s target and close to a 52-week low of $186. Analysts noted that Fair Value estimates indicate the shares appear undervalued.
The firm warned investors to prepare for a "wild 4Q25 earnings-related ride" as market participants parse what Humana discloses and update expectations for 2026 and beyond. A central source of uncertainty is the lack of early enrollment signals from the Centers for Medicare & Medicaid Services, which means there is a broad range of possible outcomes for Medicare Advantage membership growth and the associated profitability in 2026.
Guggenheim projects that Humana could achieve high-teens to low-20% total Medicare Advantage member growth if competitors scale back, a dynamic that could materially alter market share dynamics. The firm cautioned, however, that gains from competitors pulling back might be partly offset by churn related to the Open Enrollment Period. For new members, the research house anticipates negative mid-single-digit percentage margins.
The note lays out several specific near-term headwinds that could pressure results and guidance. These include the 2027 advance rate notice, an expected roughly $150 million pre-tax increase in investments in the fourth quarter of 2025, and dilution driven by 2025 and 2026 Stars ratings. Taken together, Guggenheim said these items could lead 2027 earnings per share to be lower than prior expectations.
Despite those risks, the firm maintained a constructive stance. Guggenheim suggested that recent market sentiment has effectively priced in the assumption that Humana has cut its embedded earnings capacity by more than half - a conclusion the firm views as excessively pessimistic in light of favorable structural dynamics within Medicare Advantage.
The research note appears against a backdrop of company developments. Humana has launched a partnership with Atlas Oncology Partners, effective January 1, 2026, intended to improve cancer care coordination for Medicare Advantage members in Tennessee and Mississippi through integrated interdisciplinary teams. Separately, the insurer disclosed leadership changes in its insurance segment: George Renaudin is slated to retire by the third quarter of 2026, while Aaron Martin will join as President of Medicare Advantage in January 2026. Humana has kept its full-year adjusted earnings guidance intact amid these moves.
Market sentiment has been mixed. Morgan Stanley downgraded Humana from Equalweight to Underweight over concerns about the company’s 2026 bidding approach and policy risks, and reduced its price target from $262.00 to $174.00. In addition, the Centers for Medicare & Medicaid Services announced a modest 0.09% increase in Medicare Advantage payment rates for 2027, a result that fell short of some analysts’ expectations and has reverberated across the healthcare sector.
Investors facing Humana’s upcoming earnings should expect volatility driven by enrollment signals, margin assumptions on new members, and several identifiable near-term cost and regulatory pressures. Guggenheim’s outlook remains positive relative to current market pricing, but the firm acknowledges a wide range of plausible outcomes depending on the data Humana provides and how CMS-related issues evolve.