Humana shares rose more than 15% in premarket trading after the insurer reported a sharp improvement in its Medicare Advantage (MA) Star Ratings for the 2027 plan year. The company said 95% of its MA members will be enrolled in plans rated four stars or higher for 2027. In 2026, that figure was 20%.
Higher star ratings are tied to government bonus payments and can give insurers a competitive advantage in the MA market. The improved ratings could increase Humana’s bonus payments in 2028, potentially adding billions in revenue. The additional funds could support one-time investments or shareholder returns.
Baird upgraded Humana and raised its price target from $390 to $596. By contrast, competitor Alignment Healthcare’s shares fell after its ratings were downgraded, underscoring how ratings changes are affecting companies across the managed care sector.