Humana star shortfall largest in managed care, says Morgan Stanley

Morgan Stanley says the Centers for Medicare and Medicaid Services formally released its star ratings data file for Medicare Advantage, with Humana’s (HUM) star shortfall the largest in the managed care group. CVS Health (CVS) maintains the most members in 4-plus star plans, Humana saw the largest decline at 66%, while UnitedHealth (UNH) and Elevance Health (ELV) saw declines of 16% and 21%, respectively, the analyst tells investors in a research note. The firm says that estimates a 5% earnings headwind to UnitedHealth’s 2026 with an expected stock reaction of down low-single-digits, “albeit with litigation pending.” It sees a 4% 2026 earnings headwind for Elevance with an expected stock reaction of down low-single-digits. For Humana, Morgan Stanley says a 90% unmitigated year-over-year earnings headwind could bring the stock down mid- to high-single-digits. For CVS, the firm sees an “immaterial” earnings headwind to estimated 2026 earnings with expected stock reaction of up low-single-digits.