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Members in top-rated Medicare plans for 2025 drop sharply. (0:16) Joby Aviation surges on Toyota investment. (2:08) Tesla deliveries fall short. (4:05)
The following is an abridged transcript:
Our top story so far
Humana (NYSE:HUM) is plunging after the health insurer disclosed a sharp reduction in members enrolled in its Medicare Advantage (MA) plans rated four stars and above.
Citing preliminary 2025 MA Star Ratings data, Humana said that the members enrolled in its plans rated four stars and above reached roughly 1.6 million for 2025, or 25% of all members, down from ~94% enrollment for 2024.
As part of the Star Ratings system, the Centers for Medicare and Medicaid Services rewards plans with four or more stars with annual bonus payments. Plans with higher ratings can receive higher bonuses in the following calendar year.
But Humana contested the data, noting that there may be errors in the CMS’ calculation.
In a filing the company says “there may be potential errors in CMS’ calculation of certain of its results and industry threshold cut points,” noting it will continue to engage with CMS to ensure the numbers are accurate and reflect the plans’ quality.
“Humana is exploring all available options to mitigate the expected 2026 revenue headwind related to its 2025 Star ratings in the event its challenges to the results are unsuccessful,” the company said, adding there is a risk to achieve an MA margin target of at least 3% by 2027.
But the 2025 Stars results are not expected to impact HUM’s financial results or outlook for 2024 or 2025.
Among other active stocks today, Barclays analyst George Wang sees little upside for Super Micro Computer (SMCI) near term, as he adjusted his price target for the company’s 10-for-1 stock split.
Wang, who has an Equal Weight rating on the stock, set his price target at $42, just about $0.50 above currently levels. He says the target multiple is unchanged and reflects near-term margin headwinds from competitive pricing, uncertainty around internal controls, the 10K filing delay and lack of visibility on GB200 orders.
Shares of startup Joby Aviation (JOBY) surged thanks to another $500 million from Toyota (TM). The investment will enable Joby to expand its commercialization of an electric air taxi and bring Toyota’s total investment to $894 million. The investment will be made in the form of cash for common stock.
And Salesforce (CRM) caught an upgrade by Northland Capital to Outperform from Market Perform, due in part to positive customer feedback on Agentforce, the company’s latest AI-powered offering.
The firm boosted its 12-month price target to $400 from $270 as the company’s “GenAI initiatives come to fruition with the announcement of Agentforce, providing greater confidence in sustained mid-teen revenue growth.”
In today’s trading, bulls are battling to keep stocks in the green after a decline at the opening bell. The S&P 500 (SP500) took out the lows of Tuesday briefly but then saw buyers move in as oil moved off highs.
Mary Ann Bartels, chief investment strategist at Sanctuary Wealth, says “While the stock market is grappling with a variety of worries including escalating tensions in the Middle East, a port strike and election uncertainty, liquidity is key and there is plenty of it now that the Fed has started to cut interest rates, and that means that markets can continue to grind higher.”
“The stock market impact of geopolitical tensions largely centers around oil prices, and as long as oil prices remain below $100 per barrel and corporate profits remain strong, that is supportive of higher stock prices.”
“Our message to investors is to embrace October’s volatility, as there is still plenty of fuel left in this bull market,” she said.
Rates are moving higher after the decline in the previous session. The 10-year Treasury yield (US10Y) is back around 3.80% after ADP reported a higher-than-expected rise in private payrolls for September.
Private nonfarm payrolls rose by 143,000 last month, easily topping the consensus of 121,500 and up from 103,000 in August. Annual pay increased 4.7% Y/Y, easing from 4.8% in the prior month.
In other news of note, Tesla (TSLA) was under pressure as deliveries of 462,890 for Q3 fell short of the consensus estimate of 463,897 vehicles. The EV maker said it produced 469,796 vehicles during the quarter.
Tesla (TSLA) said 3% of the deliveries total was subject to operating lease accounting. Model 3/Y deliveries for the quarter were 439,975 vs 435,920 consensus, while other models, including the Cybertruck, accounted for 22,915 deliveries vs. 26,315 consensus.
Tesla delivered 443,956 vehicles in Q2 and 435,059 vehicles in Q3 of last year. Tesla’s all-time deliveries record was 484,507 vehicles in Q4 of 2023.
And in the Wall Street Research Corner, BofA is out with their top 10 stock ideas to close out the year. They picked 9 longs and 1 short for Q4.
Technical strategist Stephen Suttmeier said he expects a stronger rest of the year, “albeit not without volatility,” as he believes the S&P 500 should reach 5,930.
Among the longs are Spotify (SPOT), with a price target of $430. Analysts say the company’s recent performance and third quarter guidance show a positive trajectory on gross margins, operating income and free cash flow. The company is also “at an inflection point…which is driving outsized share price performance.”
Walmart, with a price target of $85. They say “a shortened selling season (5 fewer days between Thanksgiving and Christmas vs. last year) will likely lead to higher online spend, favoring large digital/omni-channel players like Walmart that offer a broad range of fast/convenient fulfillment options.”
And Hasbro (HAS), with a price target of $90. The company is well positioned for upward estimate revisions due to its collectible trading card business suggesting strong momentum, high store visits heading into the holidays, continued strong high margins from digital gaming and Monopoly Go! royalties.
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