Ongoing litigation with CMS remains key overhang on Humana, says Morgan Stanley

Humana’s (HUM) ongoing litigation with the Center for Medicaid & Medicaid Services on its Medicare Advantage Stars performance remains a key overhang on the stock, Morgan Stanley tells investors in a research note. If the lawsuit to overturn the current ratings is unsuccessful, Morgan Stanley now sees roughly 138% gross unmitigated impact to Humana’s FY26E EPS or $23.18/share. The firm has an Equal Weight rating and $285 price target on the shares.