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Investing.com - BofA Securities lowered its price target on Centene (NYSE:CNC) to $52.00 from $65.00 while maintaining a Neutral rating on the stock.
The price target reduction follows Centene’s withdrawal of its 2025 guidance due to higher acuity in its Marketplace population and higher-than-expected Medicaid trend, according to BofA Securities.
The firm noted this development represents a negative indicator for other managed care organizations, with Oscar Health (98%), Centene (41%), and Molina Healthcare (NYSE:MOH) (6%) having the most exposure to exchanges, while Molina (81% of 2026E pre-tax earnings), Elevance Health (21%), and UnitedHealth Group (NYSE:UNH) (8%) face the greatest exposure to Medicaid.
BofA Securities highlighted that Centene experienced better-than-expected trends in its Medicare Advantage business, which it views as positive for Humana (NYSE:HUM) and UnitedHealth Group.
The new price target is based on 13 times 2026 estimated earnings per share, compared to the previous valuation of 9 times 2025 estimated earnings, with the firm reiterating its Neutral stance due to the worsening Marketplace and Medicaid environment, while noting that Medicaid rates should catch up over time.
In other recent news, Molina Healthcare reported impressive financial results for Q1 2025, exceeding analysts’ expectations with an earnings per share (EPS) of $6.08, above the projected $5.97. The company’s revenue also surpassed forecasts, reaching $11.15 billion compared to the anticipated $10.83 billion. This strong performance was supported by successful contract awards in Nevada and Illinois, which are expected to drive future growth. In terms of analyst ratings, Cantor Fitzgerald maintained its Overweight rating for Molina Healthcare, with a price target of $356, citing confidence in the company’s valuation and potential for improved margins in Medicaid and Medicare by 2025.
Morgan Stanley (NYSE:MS) also initiated coverage on Molina Healthcare with an Overweight rating and a price target of $364, highlighting the company’s focus on government-sponsored managed care organization products, particularly Medicaid, which contributes significantly to its profits. Analysts noted the potential for premium revenue growth outpacing the market, driven by high contract retention rates and new contract procurements. Additionally, opportunities in Dual Eligible Special Needs Plans alignment are projected to grow at a compound annual growth rate of 8% from 2025 to 2030.
Molina Healthcare has confirmed its EPS guidance for 2025 and reiterated its long-term growth expectations, aiming for a 13-15% increase. This reaffirmation underscores the company’s growth prospects and strategic focus on expanding its Medicaid and Medicare offerings. The healthcare sector remains under close watch by investors, particularly companies like Molina Healthcare operating within the government-sponsored healthcare space.
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