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Investing.com - Truist Securities has reiterated its Buy rating and $84.00 price target on Centene (NYSE:CNC) despite the company withdrawing its fiscal year 2025 guidance. According to InvestingPro data, the healthcare provider, currently trading at $34.45, appears significantly undervalued based on its Fair Value analysis.
The withdrawal comes as Centene faces an estimated $2.75 adjusted earnings per share impact from lower expected risk adjustment revenue transfers totaling approximately $1.8 billion, based on about 72% of marketplace members, with additional reductions expected when estimates become available for the remainder of its book. Despite these challenges, the company maintains strong fundamentals with a P/E ratio of 5.2 and a market capitalization of $17.09 billion.
Centene reported mixed results outside its marketplace business, with second-quarter Medicaid health benefits ratio expected to increase compared to the first quarter, while Medicare Advantage and Prescription Drug Plan segments are performing better than anticipated. InvestingPro analysis shows the company maintains a "GREAT" financial health score of 3.27, with 8 additional exclusive insights available to subscribers.
Truist Securities maintained its positive rating on Centene stock despite these challenges, noting that the company expects to implement pricing actions for 2026 in states representing a substantial majority of its marketplace members.
The investment firm also cited expectations for ongoing Medicare improvement and general and administrative expense leverage, coupled with what it described as a sharp aftermarket sell-off in Centene shares, while indicating its model and valuation are under review.
In other recent news, Centene Corporation has faced significant challenges impacting its financial outlook. The company announced the withdrawal of its fiscal year 2025 guidance due to unexpected issues with its ACA Exchange risk adjustment calculations and rising Medicaid costs. This adjustment is expected to result in a $1.8 billion reduction in revenue transfer, equating to a $2.75 decrease in adjusted earnings per share for 2025. Analysts from firms such as Cantor Fitzgerald and Jefferies have responded by lowering their price targets for Centene, with Cantor Fitzgerald adjusting its target to $65 and Jefferies to $47, while maintaining their respective Overweight and Hold ratings.
Moreover, JPMorgan has downgraded Centene from Overweight to Neutral, citing concerns about the company’s ability to navigate the ACA Exchange repricing process and regulatory uncertainties. Despite these challenges, Centene has reported that its Medicare Advantage and Prescription Drug Plan businesses are performing better than expected, providing some relief amid the difficulties. The company is also working on refiling 2026 ACA Exchange rates to reflect new data. Analysts, including those from TD Cowen, maintain a Buy rating, suggesting potential for recovery despite the current setbacks.
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