In a report released today, David Windley from Jefferies upgraded Centene (CNC – Research Report) to a Hold, with a price target of $64.00.
David Windley has given his Hold rating due to a combination of factors that reflect both positive and cautious outlooks for Centene. The increase in the price target by 21% to $64 is influenced by a favorable valuation recovery and a slight increase in expected earnings per share. The positive sentiment is driven by healthy Medicaid rate updates and the potential for minimal cuts to Medicaid in the Senate’s budget resolution, which could improve investor sentiment given Centene’s significant revenue from Medicaid.
However, Windley maintains a cautious stance on the Health Insurance Exchange (HIX) market due to significant risks, such as accelerating cost trends and rising market-level risk scores. The proposed changes in the HIX market could lead to disruptions, which tempers the overall positive outlook. Additionally, while there are favorable trends in Medicaid, the potential reductions in provider taxes and DPP payments pose risks that could impact Centene’s financial performance in the future.