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Humana (HUM) shares ended the last trading session 10.7% higher at $281.95. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 1.4% gain over the past four weeks.
The jump was largely driven by the U.S. government's decision to raise Medicare Advantage payment rates by 5.06% for 2026, more than twice the initially proposed 2.23% increase. The adjustment is expected to generate more than $25 billion in added revenue for insurers, providing a major boost to companies like Humana.
This health insurer is expected to post quarterly earnings of $9.95 per share in its upcoming report, which represents a year-over-year change of +37.6%. Revenues are expected to be $32.22 billion, up 9.8% from the year-ago quarter.
While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
For Humana, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on HUM going forward to see if this recent jump can turn into more strength down the road.
The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>
Humana belongs to the Zacks Medical - HMOs industry. Another stock from the same industry, Select Medical (SEM), closed the last trading session 0.6% higher at $15.75. Over the past month, SEM has returned -10%.
For Select Medical , the consensus EPS estimate for the upcoming report has remained unchanged over the past month at $0.45. This represents a change of -41.6% from what the company reported a year ago. Select Medical currently has a Zacks Rank of #3 (Hold).
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This article originally published on Zacks Investment Research (zacks.com).