UNH Vs. HUM: Which Insurer Stock Has More Upside After CMS Reverses Wall Street’s Biggest Medicare Rate Fear?

• The revised policy is expected to add more than $13 billion in funding to Medicare Advantage plans, following the January proposal, which wiped out nearly $100 billion in insurers' market value.
• UNH rose about 8%, and HUM gained 11% in extended trading following the announcement.
• Koyfin estimates imply a 27% upside for UnitedHealth compared with a 16% upside for Humana shares.

Shares of UnitedHealth, Inc. (UNH) and Humana, Inc. (HUM) are back in the spotlight on Tuesday after the Centers for Medicare and Medicaid Services (CMS) lifted Medicare Advantage payment rates for 2027, with Wall Street estimates pointing to a clear frontrunner.

UNH stock rose 8% in extended trading, while HUM stock gained 11%. Over the past year, however, UNH has fallen about 45% and HUM nearly 27%, with both stocks underperforming the broader Health Care Select Sector SPDR Fund (XLV), which climbed 10% over the same period.

CMS Raises Medicare Advantage Rates For 2027

The CMS finalized a 2.48% increase in Medicare Advantage payment rates for 2027, up from the January proposal that kept rates roughly flat and wiped out nearly $100 billion in market value across major insurers. The updated policy is expected to add more than $13 billion in additional funding to Medicare Advantage plans next year, the CMS said. 

With the policy overhang removed, attention has shifted back to valuation targets, which point to higher implied upside for UnitedHealth than for Humana.

UnitedHealth Holds Upside Gap Over Humana

Based on Koyfin estimates, UnitedHealth carries a 12-month average price target of $357.81, implying a 27% upside from the stock’s last close. Coverage across 29 analysts includes 7 ‘Strong Buy’, 16 ‘Buy’, 4 ‘Hold’ and 2 ‘Sell’ ratings.

Earlier this month, Raymond James upgraded the stock to ‘Outperform’ with a $330 price target, citing potential upside from expense trends and expected margin improvement at Optum Health, the company’s care delivery arm. Meanwhile, Bernstein SocGen Group reiterated an ‘Outperform’ rating with a $405 target, pointing to UnitedHealth’s expanding AI strategy. 

The company recently launched its generative AI companion, Avery, as part of broader efforts to reduce operating costs across its insurance segment, where it plans nearly $1 billion in expense cuts and is closing or divesting about 550 Optum Health clinics. UnitedHealth also expects to lose as many as 2.8 million insurance members this year, with revenue potentially declining for the first time since the 1980s as longtime chair and former CEO Stephen Hemsley leads a turnaround effort. 

The stock still remains below the level at which Warren Buffett’s Berkshire Hathaway built its stake last year and faces scrutiny over Medicare Advantage risk-adjustment practices following a Senate committee review.

Humana EPS Outlook Weighs On Upside Case

Humana’s upside appears more modest based on Koyfin estimates, with a 12-month average price target of $212.17, implying a 16% upside from current levels. Among 27 covering analysts, the stock carries 2 ‘Strong Buy’, 6 ‘Buy’, 17 ‘Hold’ and 2 ‘Sell’ ratings.

Earlier this year, the company projected adjusted 2026 earnings of at least $9 per share, below consensus expectations of $11.87, while the insurer said margins in its individual Medicare Advantage business could remain just below break-even this year.

Several brokerages subsequently lowered price targets, with UBS and BofA maintaining ‘Neutral’ ratings after Humana’s 2026 EPS outlook came in roughly 24% below consensus. On the other hand, Morgan Stanley warned that uncertainty around the size of Humana’s 2026 membership cohort remains a risk “particularly heading into 2027 and beyond.”

Cantor Fitzgerald said the stock may remain range-bound until clearer membership data emerges in the second quarter, and Guggenheim said it was taking “a prudent view” of the company’s 2027 earnings outlook.

Still, Humana expects enrollment in its individual Medicare Advantage plans to increase about 25% in 2026 compared with last year, with over 70% of new members coming from competing plans.

How Do Retail Traders Feel About UNH, HUM?

On Stocktwits, retail sentiment for UNH and HUM was ‘extremely bullish’ amid ‘extremely high’ message volume.

One user said UNH “was $600 a year ago. One of the safest blue chips to double In a couple years.”

Another user noted that “this $13B increase provides critical revenue relief, offsetting rising medical costs and securing sector stability.”

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