The stake talks between Walgreens Boots Alliance (WBA) and Humana (HUM), as reported last night by the Wall Street Journal, follows in the pattern of the Aetna (AET)/CVS Health (CVS) deal, but it is not fully clear how Humana would benefit from an investment in Walgreens, Jefferies analyst Brian Tanquilut tells investors in a research note. For Walgreens, a partnership approach matches the company's strategy and would help address questions about the long-term viability of the retail pharmacy model, adds the analyst. He believes partnering with Humana helps Walgreens drive market share. Further, a deal could also help strengthen Humana's brand and improve its ability to market directly to prospective insurance lives, especially as healthcare increasingly becomes consumer-focused, Tanquilut says.

RBC Capital lowered the firm's price target on Humana to $353 from $415 but keeps an Outperform rating on the shares after its Q1 results and updated outlook. While the management is taking 2025 adjusted EPS growth targets off the table for now, the company also stressed its continued commitment to margin improvement next year, indicating that pulling guidance does not signal that 2025 is a no-growth year, the analyst tells investors in a research note. RBC adds however that it is still cutting its FY25 EPS outlook for Humana to $20.28 from $23.87.

Oppenheimer analyst Michael Wiederhorn lowered the firm's price target on Humana to $370 from $415 and keeps an Outperform rating on the shares. The firm says Humana handily topped Q1 2024 expectations and maintained FY2024 guidance, highlighted by improving IP trends in March, leading to an in-line MLR without any contribution from favorable Q4 PPRD that seems likely. Looking forward, management pulled its 2025 growth guidance of $6-$10 EPS due to the rate pressures and TBC limitations, and also extended its return to 3% margins beyond 2026, says Oppenheimer. Overall, Humana continues to face the magnified impact from MA due to its significant exposure, but also boasts a portfolio with significant long-term margin upside, the firm adds.

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Affirms FY 2024 Insurance segment benefit ratio of approximately 90%. Raises 2024 individual Medicare Advantage annual membership growth by 50,000 to now anticipate annual growth of approximately 150,000, or 2.8%.

Reports Q1 revenue $29.61B, consensus $28.47B.