After Humana released an 8-K this morning indicating that preliminary Medicare Advantage Star Ratings data available on CMS Plan Finder as of October 1 shows only 25% of the company’s members are currently enrolled in plans rated 4 stars and above for 2025, versus 94% in the previous year, Baird notes that the company says it believes there may be potential errors with CMS’ calculations of results and cut points and is in the process of appealing their results. The firm, which estimates a gross unmitigated EPS headwind impact of about ($23) to 2026 EPS, representing a 90% gross EPS headwind compared to the $25.77 consensus 2026 EPS estimate, says that if it assumes Humana can mitigate about 30% of the gross EPS headwind via benefit modulation and Group MA member mitigation, this may leave the company at roughly $10 EPS by 2026. The firm has a Neutral rating and $374 price target on Humana shares.
