Morgan Stanley Starts Centene (CNC) at Overweight

Morgan Stanley analyst Erin Wright initiates coverage on Centene (NYSE: CNC) with a Overweight rating and a price target of $70.00.

The analyst comments: "CNC is a leading MCO, primarily focused on serving members in the Medicaid program (60% of profit) along with the Individual Exchange (29%) and Medicare Advantage (7%). While the Medicaid program is currently facing headwinds from state rate-member acuity mismatch and funding uncertainty and Exchanges may face the expiration of enhanced subsidies, we think key drivers in leveraging its entrenched footprint across the Medicaid market, D-SNP integration LT (+10% CAGR from '25-'30), and nascent ICHRA opportunity (TAM ~$560M in excess of Exchange TAM) are underappreciated. Faster growth across these higher margin segments along with continuing cost savings / S&A leverage should support margin expansion over time. These drivers, along with capital deployment (+4-5%), should support EPS CAGR of +8.8% over the next three years, slightly ahead of Consensus (+8.6%)."

For an analyst ratings summary and ratings history on Centene click here. For more ratings news on Centene click here.

Shares of Centene closed at $55.16 yesterday.

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