Cantor Fitzgerald upgrades Humana stock rating on Medicare margin outlook

Cantor Fitzgerald raised its rating on Humana stock to Overweight from Neutral, with an increased price target of $460 from $300, based on higher confidence in the company's Medicare margin and STARS recovery. The stock is currently trading at $404.27, and InvestingPro suggests it is undervalued with a Fair Value of $441, placing it among the platform's most undervalued stocks.

The firm raised its earnings per share estimates for 2027 to $17.96 from $15.86 and for 2028 to $28.27 from $25.38. Cantor Fitzgerald believes the company's two-year improvement in Medicare Advantage margins is underpriced, with the stock trading at 9.9 times the midpoint of its 2028 earnings framework compared to around 18 times its average P/E ratio over the past three, five, and 10 years.

The next catalyst expected to drive the stock higher is the release of Bonus Year 2028 Stars on October 9, followed by the confirmation of 2027 enrollment meeting expectations and the potential for earnings per share to reach $11.73-$18.86.