The stock still needs about $26 of 2027 earnings at 16 times. I model $24 because Stars bonuses pay in 2028. That is a $385 stock.
Key points
- $9.00 remains the 2026 adjusted EPS floor Humana reaffirmed on October 13.
- 16 times $26.30 is what $420 requires of 2027 earnings.
- Bonus Year 2028 is when the October 8 CMS Stars print turns into cash.
The call
The price requires about $26 of 2027 earnings at 16 times. Stars restoration still maps to Bonus Year 2028, after 2027 plan exits of about 600,000 members and a still-high benefit ratio.
I model $24 of 2027 earnings as margins only half recover, then $32 in 2028. Sixteen times $24 is $385. The market is too optimistic on the timing of cash.
Adjusted EPS: history and my 2027-28 forecasts- Reported / company floor
- My forecast
Company floor and my estimates; Stars cash lands 2028. As of Oct 13, 2026.
Valuation
| Item | Figure |
|---|
| 2026 adjusted EPS (company floor) | $9.00 |
| My 2027 EPS | $24.00 |
| Multiple on 2027 earnings | 16 times |
| 12-month target | $385 |
| Implied 2028 EPS at same multiple | $32 |
Managed-care names trade 14 to 18 times when margins are climbing. Sixteen times is fair if 2028 works. Downside if 2027 prints near $18 is larger than upside to $32 at 16 times, so the rating is sell.
What $420 requires vs my 2027 earnings16 times 2027 EPS. Source: filings and my model, Oct 13 2026.
Risks
- 2027 bids recapture more members than planned and lift 2027 EPS above $27.
- Benefit ratio stays near 91% instead of the 92.75% guide.
- CMS rate notice for 2028 is far better than bids assumed.
What would change my mind
A 2027 adjusted EPS guide above $26 on the December 10 investor update.