Can Better Star Ratings and Margin Expansion Drive Humana (HUM) Higher?

In Eagle Capital Management's Q2 2026 investor letter, the firm discussed its outlook for Humana Inc. (NYSE:HUM), an American insurance company. Humana operates in the managed care sector, which includes companies like UnitedHealth Group and Elevance. Eagle Capital Management believes the managed care industry, while facing cost/price pressures in Medicare Advantage and Medicaid, is transitioning to a multi-year period of improved margins and earnings.

They see Al-driven technology projects as a potential solution to reduce costs and enhance service quality. Specifically for Humana Inc., Eagle Capital Management anticipates significant improvement in Star ratings later in the year, as well as a 15-20% growth in earnings per share (EPS) over the next several years. This growth is expected to be driven by moderate revenue growth and expanding margins.

Eagle Capital Management's investment strategy involves recycling capital towards attractive opportunities outside of crowded AI trades while maintaining exposure to high-quality beneficiaries. Currently, Humana Inc. is not on the firm's list of the 40 Most Popular Stocks Among Hedge Funds, indicating that the company is not as popular among hedge funds.

Despite this, the firm still acknowledges Humana Inc. as a potential investment, albeit with the view that certain AI stocks might offer greater upside potential and carry less downside risk.