BofA shakes up ratings of healthcare stocks following Trump win

BofA upgraded Humana (HUM) to Neutral, while downgrading three other names in the healthcare space following Donald Trump’s election win last night. The firm believes the risk reward has “dramatically improved” as the potential for stronger rates and reduced scrutiny on stars and antitrust give Humana “a potential avenue for stock appreciation.”

On the flip side, BofA sees risks to exchanges and Medicaid supplemental payments after the election and moves to the sidelines on Universal Health (UHS) and Ardent Health (ARDT). Further, the firm downgraded Oscar Health (OSCR) to Underperform, arguing that a change in administration “dramatically increases” the odds of that the enhanced exchange subsidies expire and that the regulatory environment tightens.

IMPROVED RISK REWARD: BofA upgraded Humana to Neutral from Underperform with a price target of $308, up from $247, on the results of the election. The risk reward at these valuations has “dramatically improved” as the potential for stronger rates, and reduced scrutiny on stars and antitrust, each give Humana “a potential avenue for stock appreciation,” the firm tells investors. However, given the somewhat binary nature of these catalysts, BofA is maintaining its trough $13 of EPS in 2026 estimates as it awaits more clarity.

The firm also notes that it has been widely reported by Bloomberg and others that Cigna (CI) is pursuing an acquisition of Humana. With the election clarity on rates, and what is likely to be a softening of antitrust scrutiny under Republicans, BofA believes the odds of a deal being announced are now significantly higher, which helps puts a floor on valuation.

MOVING TO THE SIDELINES: Meanwhile, BofA downgraded Universal Health and Ardent Health to Neutral from Buy with price targets of $223 and $19, down from $259 and $22, respectively. After the election win for Donald Trump, the firm sees risks to exchanges and Medicaid supplemental payments, noting that it views the Trump win as negative for healthcare facilities, and hospitals in particular, and believes that the current favorable environment is at risk. Trump can reduce supplemental payments administratively and the Republican president and Senate would push for enhanced subsidies expiring, BofA tells investors.

SELL AFTER TRUMP WIN: More bearish, BofA downgraded Oscar Health to Underperform from Neutral with a price target of $13.50, down from $21, as the firm argues that a change in administration “dramatically increases” the odds of that the enhanced exchange subsidies expire and that the regulatory environment tightens. The firm is lowering its EPS estimates in 2027 to 85c, which is now 60% below consensus. In the near term, Oscar Health is likely to be supported by strong quarterly results, but BofA expects valuation to be capped as one approaches the subsidy debate in congress and enrollment cliff in 2026.

PRICE ACTION: In morning trading, shares of Humana have jumped about 8% to $282.04. On the flip side, Ardent has plunged over 10% to $15.25, Universal Health has slid more than 4% to $203.18, and Oscar Health has slipped over 13% to $15.91.