Wells Fargo downgrades Centene with ‘bear case’ playing out

Wells Fargo downgraded Centene (CNC) to Equal Weight from Overweight with a price target of $30, down from $72. The firm says the managed care “bear case” is playing out with “material” exchange disruption and further pressure on Medicaid margins. If it difficult to have confidence in medium-term improvement due to uncertainties from the expiration of enhanced exchange subsidies in 2026 and Medicaid work regulations in 2027, the analyst tells investors in a research note. Wells cut estimates for Centene and finds it difficult to make a case for much higher share multiples given uncertainty on both its Medicaid and exchange performance as well as a lack of other offsetting businesses.