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Investing.com - BofA Securities downgraded Centene (NYSE:CNC) from Neutral to Underperform and slashed its price target to $30.00 from $52.00 on Wednesday. The stock, currently trading near its 52-week low of $29.98, has declined over 50% year-to-date. According to InvestingPro data, the company maintains a "GOOD" Financial Health score despite recent market challenges.
The downgrade reflects concerns about slowing end markets in Medicaid, which represents 54% of Centene’s revenue, and Affordable Care Act (ACA) exchanges, which account for 23% of revenue.
BofA Securities cited the recently passed Reconciliation Bill as a factor negatively impacting Centene’s Medicaid business, while also noting the "increasingly higher likelihood that enhanced exchange subsidies expire at the end of 2025."
The investment firm reduced its earnings per share estimates for Centene to $3.75 from $3.98 for 2026, and to $5.57 from $6.04 for 2027.
The new price target of $30.00 represents a multiple of 7.5 times BofA’s 2026 earnings estimate, down from the previous valuation of 13 times 2026 estimated earnings.
In other recent news, Centene Corporation has withdrawn its 2025 financial guidance due to challenges in its Marketplace business and Medicaid segment. This decision follows the release of Wakely data, which revealed higher market morbidity than anticipated, leading to a projected $1.8 billion reduction in risk adjustment revenue transfers. Wolfe Research noted the potential for a broader impact, estimating a total effect of approximately $2.5 billion or $3.80 per share. In response, Morgan Stanley (NYSE:MS) downgraded Centene’s stock rating from Overweight to Equalweight, citing significant pressure in the Health Insurance Exchange business and adjusting its 2025 earnings per share estimate to $3.78 from $7.35. Meanwhile, Truist Securities reiterated its Buy rating on Centene, highlighting potential pricing actions for 2026 and ongoing improvements in its Medicare segments. In a separate development, Canada Nickel Company announced promising results from its exploration drilling at the MacDiarmid property, identifying significant nickel mineralization. The company plans to continue its drilling activities and publish additional resource estimates by year-end. Lastly, TD Cowen maintained its Buy rating on CVS Health (NYSE:CVS), noting the company’s limited exposure to risks affecting Centene and potential upside from favorable trends in Medicare Advantage and Prescription Drug Plans.
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