Why This Bullish Humana Analyst Just Raised His Price Target To $549 On The Stock

Checks suggest Humana Inc HUM has improved its competitive positioning, which could lead to stronger membership growth in 2023, according to Morgan Stanley.

The Humana Analyst: Michael Ha upgraded the rating for Humana from Equal-Weight to Overweight, while raising the price target from $494 to $549.

The Humana Thesis: At its Investor Day held on Sept. 15, the company unveiled a path to more than 48% cumulative earnings power over the next three years, which translates to $37 in earnings per share by 2025, Ha said in the upgrade note.

He's not alone in his bullish stance on Humana, as Benzinga analyst data shows an Overweight consensus rating on the stock.

“Based on our proprietary analysis of Medicare Advantage (MA) benefit richness, we believe Humana’s 2023 plan value increases are not only the highest in recent history but also positions the company as the #1 Ranked Retail Medicare Advantage prescription drug (MA-PD) plan in benefit richness amongst peers (vs. #5 ranking in the previous four years),” the analyst wrote.

“We now believe 2023 is more than just a one-year MA pricing reset but a structural enhancement to Humana’s MA benefit offering creating a value proposition that we believe should provide stronger membership growth in the coming years (more than double Individual MA membership growth to +10% yty 2023E from +4% yty2022E),” he added.

HUM Price Action: Shares of Humana had risen by 2.53% to $513.75 at the time of publication Tuesday.