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Investing.com - Cantor Fitzgerald has reduced its price target for Centene (NYSE:CNC) to $65.00 from $95.00 while maintaining an Overweight rating on the healthcare company’s stock. The company, currently trading near its 52-week low of $52.93, has seen its shares decline by approximately 14% over the past year. According to InvestingPro data, the stock appears undervalued at current levels, with analysts’ targets ranging from $45 to $92.
The significant price target reduction reflects Cantor Fitzgerald’s lowered earnings per share (EPS) estimate for 2025, which was cut to $4.27 from $7.27 previously. This adjustment accounts for a $2.75 decrease in Health Insurance Exchange (HIX) earnings and an additional $0.25 pressure on Medicaid performance. InvestingPro data reveals that six analysts have recently revised their earnings estimates downward, though the company maintains a strong financial health score of "GREAT" with a P/E ratio of 8.46x.
Cantor Fitzgerald’s analysis assumes Centene’s Medicaid MLR ( Medical (TASE:BLWV) Loss Ratio) issues will resolve through rate adjustments in 2026, while a substantial portion of HIX challenges will be addressed through bid strategy and market rationalization that same year.
For 2026, the firm has revised its HIX assumptions to project 10% enrollment losses, 9% price increases, and an 81.7% MLR, compared to previous estimates of 5.6% enrollment gains, 1% price increases, and an 80.7% MLR.
The firm has consequently lowered its 2026 EPS estimate for Centene to $7.27 from $8.09, though it noted the current projections "may prove to be overly conservative" and suggested the company could potentially "take advantage of surprise prices with an ASR program."
In other recent news, Centene Corporation has faced notable challenges, leading to significant updates for investors. The company announced the withdrawal of its fiscal year 2025 guidance due to unexpected issues with Health Insurance Exchange (HIX) risk adjustment calculations and rising Medicaid costs. Centene revealed a $1.8 billion under-accrual in HIX risk adjustments, impacting earnings per share by $2.75 and affecting 76% of its HIX membership across 22 states. This has prompted Jefferies to lower its price target on Centene to $47.00, maintaining a Hold rating, while JPMorgan downgraded its rating from Overweight to Neutral, adjusting the price target to $48.00.
Additionally, UBS downgraded Centene’s stock from Buy to Neutral, reducing the price target to $45.00 due to revised earnings per share estimates showing a significant decline. Meanwhile, Morgan Stanley (NYSE:MS) maintained an Overweight rating with a $70.00 price target, noting Centene’s efforts to refile 2026 ACA Exchange rates. Despite these challenges, Centene reported better-than-expected performance in its Medicare Advantage and Prescription Drug Plan businesses, offering some offset to the difficulties. TD Cowen reiterated a Buy rating with a $73.00 price target, acknowledging the company’s ongoing challenges but expressing some optimism about its other business lines. These developments highlight the complex landscape Centene is navigating as it addresses these financial and operational hurdles.
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