Humana (NYSE: HUM) closed at $420.38 on October 13 and has returned 112% over six months. The company sells private health plans to Medicare members, and the government's five-star ratings determine whether it receives a bonus payment on top of its standard rate. Humana expects 95% of its Medicare members to be in plans rated four stars or better for 2027, up from 20% a year earlier and ahead of analyst forecasts. The bonus, estimated by a broker at around $4.8 billion, is expected to be paid in 2028, and the article notes such money is often spent on member benefits rather than kept as profit. At 24.33 times next year's expected earnings, the author judges the stock expensive on current earnings and reasonable only if the bonus arrives and is retained.
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