What is happening with Humana, and given that it is in a crisis, should investors be interested in investing? or refrain from.
While perusing various popular stocks, I discovered that Humana had seen a collapse as a result of corporate restructuring. Is it appropriate for me to look into investing right now? I was considering spending roughly $100, but I decided to consult experts to find out what they believed would be the greatest option overall.
The credit rating has been downgraded, enrollment is declining, and costs are rising. Most anticipate poor results in 2026 and are looking to exit the stock. I expect another credit downgrade once management addresses the 2026 outlook.
I believe the stock price could drop to around $200, but that will largely depend on the forecasts for 2026.
Company Medicare plans, which generate 45% of company revenue, were lowered from 4.5 stars to 3.5 stars, in my opinion. Without a rating of 4, they would not receive as much funds from the Affordable Care Act.
If my understanding of the article is incorrect, then it wasn’t their credit.
The Medicare stars rating impacts how much a plan can charge for its services. The issue with these ratings is that CMS is facing budget constraints. Most managed care organizations (MCOs) were rated around 4 stars, but CMS raised the standards, allowing them to pay out less and keep more funds in the system. As a result, many plans saw their ratings drop due to the stricter criteria. Combined with member redetermination and market contraction, 2025 and 2026 are expected to be tough years.
Those are good points. If it reaches $200, would you consider purchasing it?
There seem to be a lot of worries about what lies ahead, particularly in light of the possibility of another downgrade. Do you think there are any techniques to lessen the risks for investors?
Avoid using certain option techniques, like the bear put spread, or use them. I would probably advise against it. Plenty many fish in the Nasdaq and Nyse seas.
It is not just a series of budget cuts, though.
Humana revealed that they anticipate a drop in income in the future due to an impending downgrade of their Medicare Advantage plans’ CMS ratings.
The stock has already begun to receive downgrades from certain analysts.
Is a same situation occurring at rival companies like Organon, Molina, and United Health?
Somehow, Humana’s CMS ratings were leaked ahead of schedule, while the others remain unreleased.
I am not sure if the $2,000 cap on drug costs, which shifts the extra expense onto the carrier, is also playing a role. They’re aware that in some of their top markets with 500k+ members, significant disruption is expected, and they are seemingly okay with losing up to half of those members to competitors.
People are already buying the dip, so I would likely do the same. However, without understanding the company’s fundamentals or the reason behind the dip, it’s essentially gambling. That’s not to say you should not do it just be aware of what you’re getting into.
It is nearly -50% YTD, how can you call it a dip when it’s been dipping the entire year? 