Humana upgraded by Jefferies on insurer’s Medicare Advantage diversification strategy
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Humana upgraded by Jefferies on insurer’s Medicare Advantage diversification strategy Humana has the ability to grow MA membership while diversifying into higher star-rated plans, analyst says.
Business Intelligence By Susan Morse , Executive Editor | December 8, 2025 | 11:05 AM Photo: Raymond Gehman/Getty Images Humana has been upgraded by Jefferies based on its diversification strategy for its Medicare Advantage offerings.The upgrade reflects Humana’s success in strengthening its Medicare Advantage portfolio and improving the quality mix of its plans, according to Jefferies analysis.On X, Jeffries stock analyst and Managing Director David Windley said, "Our H-contract–level analysis of Humana’s Stars diversification effort increases our 2026 and 2027 earnings per share estimates to approximately $14.19 and $24.10 (consensus $12.37 and $19.47). High voluntary churn (around 15%) and significant 2026 share gains should drive even greater Stars diversification than previously expected. Even assuming roughly 2.4 million gross new members onboard at a –1% margin and increasing the headwind from value-based contracting to 100 basis points (from 30 basis points), we now view the risk/reward as attractive. We upgrade to Buy."Jeffries’ analysis points to a meaningful increase in Humana’s forecasted earnings for 2026 and 2027, Seeking Alpha said. Humana’s projected 2026 and 2027 earnings per share of $14.19 and $24.10, respectively, is above estimates of $12.37 and $19.47.WHY THIS MATTERS“The upgrade hinges on the view that Humana’s ability to grow membership while diversifying into higher-rated plans -- those with higher Star Ratings -- will materially enhance profitability, even after factoring in margin pressures from new members and contracting risks,” Seeking Alpha said.Humana’s MA membership growth is expected to be 21% in 2026, driven by lower attrition and strong market share gains, the report said.The analysis assumes Humana will capture 35% of all new industry applications, translating into roughly 2.4 million members, offset by 1.2 million losses from member attrition and mortality.THE LARGER TRENDIn November, Humana again signaled its intention to win its star ratings case against the Centers for Medicare and Medicaid Services filing an appeal notice to the U.S. Court of Appeals for the Fifth Circuit.Humana has taken issue with CMS over its star ratings decrease that has cost the insurer more than $1 billion in bonuses.CMS gives bonuses to plans that score 4 stars or above. In its original lawsuit, one of Humana’s MA contracts decreased to a 3.5-star rating from a 4.5-star rating in 2024. Email the writer: [email protected] Topic: Accounting & Financial Management, Business Intelligence, Medicare & Medicaid, Operations, Strategic Planning