On Friday, UBS analyst upgraded shares of Centene Corporation (NYSE: NYSE:CNC) from Neutral to Buy, adjusting the price target slightly to $80.00, up from the previous $79.00. The upgrade comes after a thorough analysis of the company's financial outlook and market position. The healthcare provider, currently valued at $29.32 billion, has maintained a strong financial health score of "GREAT" according to InvestingPro data.
The analyst cited Centene's current stock value as "overly discounted," noting the company's explicit guidance on potential challenges, such as the loss of enhanced subsidies related to the public exchange post-2025.
Trading near its 52-week low at $58 and showing a P/E ratio of just 10x, the stock appears undervalued based on InvestingPro's Fair Value analysis. Despite these headwinds, the company outlined strategies for growth in Medicaid and Medicare, which are expected to contribute to a projected earnings per share (EPS) of $8.00 in 2026.
According to UBS, the market's current expectations for Centene's 2026 EPS do not align with historical valuation metrics, implying a 20% year-over-year decline to $5.80, which the analyst believes is excessively pessimistic. With the stock trading at seven times UBS's 2026 EPS estimates, the firm finds Centene's valuation particularly attractive.
The new price target of $80.00 is based on a 10x multiple of the firm's 2026 EPS estimate, suggesting a 38% upside potential from the stock's current level. UBS's revised outlook reflects confidence in Centene's ability to navigate upcoming challenges and capitalize on growth opportunities in its Medicaid and Medicare segments.
In other recent news, Centene Corporation has provided an adjusted diluted earnings per share (EPS) forecast for 2025 of over $7.25, exceeding the consensus estimate of $7.05. The company also reaffirmed its 2024 adjusted diluted EPS guidance of more than $6.80.
Centene's financial outlook includes total revenues ranging from $166.5 billion to $169.5 billion for 2025. The company received a downgrade from Jefferies due to concerns about regulatory changes impacting earnings, and Deutsche Bank (ETR:DBKGn) adjusted its price target for the company to $84 but maintained a Hold rating.
In the wake of the shooting death of a UnitedHealth Group (NYSE:UNH) executive, Centene CEO Sarah London cancelled a conference appearance and moved the investor day online. Sunshine Health, part of Centene Corporation, announced the appointment of Charlene Zein as its new CEO.
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