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Humana (NYSE:HUM) was upgraded to Buy from Hold with the price target raised to $576 from $514 per share by Deutsche Bank on Wednesday.
Analysts there explained in a note to clients that the recent AEP-Palooza event prompted the upgrade.
At the event, the analysts said, “six regional independent MA brokers confirmed to us the solidifying of Humana’s leading position in MA, and the rising challenges facing many of its competitors.”
“The event, combined with the recent Star ratings released by CMS lead us to believe that Humana should have a multi-year competitive advantage in managed care’s fastest growing end market. We believe this combination of factors should allow Humana to deliver on its 2025 earnings target of $37 p/s. The six independent brokers who attended our event all confirmed their tendency to steer beneficiaries toward the big carriers for plan decisions due to their broader networks, trusted core benefits design, and higher satisfaction rates, and thus lower churn,” they wrote.
“Considering the feedback from broker consultants, macro tailwinds for big players to consolidate shares, and the company’s commitment to strengthen benefit designs and build/scale CenterWell platform, we anticipate Humana will come back strong in 2023 after stumbling in 2022. Combining with the alternative capital deployment capabilities as well as the significant less tailwind benefited from covid in the past few years, we see Humana on track to achieve 2025 earnings target.”
