Stars relief drove a 114% six-month run, but $420.38 needs $28.03 of 2028 profit. I see $24.00 on thin margins, for 14% downside to $360.
Key points
- $40.87 billion in revenue in Q2 2026 grew fast while Insurance profit stayed thin at $820 million.
- 91.2% benefit ratio in Q2 2026 means care costs took most premiums and left little room for error.
- $9.00 a share in 2026 guided profit leaves the $420.38 share price at about 47 times this year.
The call
The market is too optimistic after the Stars pop. At $420.38 a share the stock needs about $28.03 of profit. That math uses 15 times future earnings, or price divided by profit, for thin regulated margins.
Rebound has far outrun the marketMonthly closes Oct 2025 to Oct 2026, Rallies data as of Oct 13 2026.
I expect profit to fall short and the stock to follow. I forecast $24.00 of profit in 2028 after slow bonus timing and plan exits. The clinic deal helps funding but adds unknown guarantees and no new profit this year.
Valuation
Target hinges on 2028 profit per shareAuthor arithmetic at 15 times 2028 profit; $28.03 needed to hold $420.38.
| Item | Figure |
|---|
| 2028 revenue | $179 billion in 2028 |
| Individual MA pretax margin | 2.2% in 2028 |
| 2028 adjusted profit | $24.00 a share in 2028 |
| Multiple | 15 times earnings in 2028 |
| Target | $360.00 a share by October 2027 |
Peers with thin regulated margins trade near 15 times earnings. The multiple reflects policy risk and slow bonus cash flow. Downside near 14% to target supports a sell.
Risks
- Stars bonuses for Bonus Year 2028 arrive faster than expected, watch CMS bonus payments and the December 2026 investor update.
- Medical cost growth cools below the 8% trend pace, watch the benefit ratio in Q3 2026 results due November 6.
- Membership holds up better after 2027 exits near 600,000, watch 2027 enrollment and retention disclosures in early 2027.
What would change my mind
Sustained benefit ratio below 90% in 2027 with membership retained would lift my margin path.