Robinhood shares gain on Q2 beat, as user and crypto growth accelerate
Investing.com - JPMorgan downgraded Centene (NYSE:CNC), a $28.19 billion healthcare provider trading at 8.46x earnings, from Overweight to Neutral on Tuesday, slashing its price target to $48.00 from $75.00 following the healthcare company’s withdrawal of its fiscal year 2025 guidance. According to InvestingPro analysis, the stock appears undervalued at current levels.
Centene announced after Tuesday’s market close that it was withdrawing its previous FY25 guidance, citing Wakely data showing slower growth and worse morbidity in the broader Affordable Care Act (ACA) exchange market, along with higher-than-anticipated Medicaid trend. InvestingPro data reveals that six analysts have recently revised their earnings expectations downward for the upcoming period.
The company estimated a $1.8 billion net risk adjustment revenue transfer reduction, equating to approximately $2.75 adjusted earnings per share impact in 2025 for 72% of Centene’s ACA Exchange book.
JPMorgan noted that while Centene expects to implement corrective pricing actions for 2026 in states representing a substantial majority of its Marketplace membership, regulatory uncertainty around the ACA Exchanges persists.
The downgrade reflects concerns about Centene’s ability to navigate the potential repricing process as well as changes related to enhanced Advanced Premium Tax Credits (eAPTCs) and the Centers for Medicare & Medicaid Services’ marketplace integrity rules.
In other recent news, Centene Corporation has withdrawn its 2025 earnings guidance due to challenges in marketplace risk adjustments and increased Medicaid costs. Preliminary data from Wakely, an independent actuarial firm, revealed lower-than-expected market growth and higher morbidity, impacting Centene’s revenue by approximately $1.8 billion. This has led to a projected earnings per share reduction of about $2.75. In response, Centene is refiling its 2026 marketplace rates to address these challenges. UBS downgraded Centene’s stock from Buy to Neutral, citing the company’s withdrawal of guidance and concerns over earnings. The firm projects a significant decline in Centene’s earnings per share for 2025 and 2026. Meanwhile, Cantor Fitzgerald has maintained an Overweight rating, suggesting limited impact from Medicaid work requirements on Centene. Morgan Stanley (NYSE:MS) also initiated coverage with an Overweight rating, highlighting potential growth opportunities in the Medicaid and Medicare Advantage programs.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.