On Friday, Stephens made an adjustment to Centene (NYSE:CNC) Corporation's (NYSE:CNC) stock price target, reducing it from $75.00 to $73.00. The firm sustained its Equal Weight rating on the healthcare company, which currently trades at $58 with a market capitalization of $29.32 billion.
The decision follows Centene's strategic shift towards long-term growth, focusing on earnings potential that the company expects to realize in the latter half of the decade. According to InvestingPro data, the stock trades at an attractive P/E ratio of 10.07, suggesting potential value opportunity.
In a recent statement, the firm acknowledged Centene's efforts to navigate through a disruptive period and its current strategy aimed at achieving an annual adjusted earnings per share (EPS) growth rate of 12% to 15%.
This growth is anticipated to commence in 2026, with Medicaid Medical (TASE:PMCN) Loss Ratios (MLRs) normalizing to approximately 90%, which is at the higher end of the long-term target range of 89% to 90%. This normalization could contribute an additional $1.60 to $2.00 to the adjusted EPS. InvestingPro analysis reveals that 12 analysts have recently revised their earnings expectations downward for the upcoming period.
However, Centene also faces potential challenges, notably the expiration of the Health Insurance Marketplace's enhanced Advanced Premium Tax Credits (eAPTC) after 2025. The company has prepared for a worst-case scenario of a 30% reduction in membership due to this change.
Despite these challenges, Centene has identified growth opportunities in the established Duals market and the emerging Individual Coverage Health Reimbursement Arrangement (ICHRA) sector. The company is also striving to improve profitability in both the Medicare Advantage (MA) and Prescription Drug Plan (PDP) markets.
The revised price target reflects an update to the firm's financial model for Centene, taking into account both the embedded opportunities and potential headwinds. The Equal Weight rating indicates the analyst's view that Centene's stock is expected to perform in line with the average returns of the stocks the analyst covers within the same sector.
InvestingPro data shows management has been actively buying back shares, and the stock currently appears undervalued based on InvestingPro's Fair Value analysis. For deeper insights into Centene's valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Centene Corporation, a major healthcare insurance provider, has been the subject of several analyst adjustments. UBS upgraded Centene from Neutral to Buy, setting a new price target of $80.00, citing the company's strong financial health and potential for growth in Medicaid and Medicare. The firm also highlighted the company's projected earnings per share (EPS) of $8.00 in 2026.
On the other hand, Jefferies downgraded Centene to Underperform, reducing the price target to $52.00 due to concerns about regulatory changes that could impact the company's earnings. Deutsche Bank (ETR:DBKGn) also adjusted its price target for Centene to $84 but maintained a Hold rating.
In recent developments, Centene outlined its financial outlook, forecasting an adjusted diluted EPS for 2025 of over $7.25, exceeding the consensus estimate of $7.05. The company also reaffirmed its 2024 adjusted diluted EPS guidance of more than $6.80. Total (EPA:TTEF) revenues for 2025 are expected to range from $166.5 billion to $169.5 billion.
In corporate news, Centene CEO Sarah London cancelled a conference appearance and moved the investor day online following the shooting death of a UnitedHealth Group (NYSE:UNH) executive. Moreover, Sunshine Health, part of Centene Corporation, announced the appointment of Charlene Zein as its new CEO.
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