Centene’s Growth Potential Amidst Challenges: A Buy Rating from Stephen Baxter

Centene (CNC – Research Report), the Healthcare sector company, was revisited by a Wall Street analyst yesterday. Analyst Stephen Baxter from Wells Fargo maintained a Buy rating on the stock and has a $72.00 price target.

Stephen Baxter has given his Buy rating due to a combination of factors that highlight potential growth opportunities for Centene despite recent challenges. Although the Q4 results were mixed, with a higher Medicaid Medical Loss Ratio (MLR) creating a more challenging starting point for 2025, Baxter sees the potential for earnings power recovery as a significant opportunity. The company noted that certain retroactive rate adjustments did not materialize as expected, which was a disappointment. However, Centene’s projection of a composite rate update starting at mid-4% is better than previously anticipated, providing a solid foundation for Medicaid improvements.
In the exchanges segment, Centene’s membership dynamics for 2025 are expected to align with historical norms, indicating potential premium guidance upside. Furthermore, the company raised its premium guidance for 2025, driven by strong performance in Medicare Part D and Medicare Advantage enrollments. Despite lowering the price target slightly due to the Medicaid MLR starting point, Baxter remains optimistic about Centene’s earnings recovery and believes the current valuation adequately considers political risks. The analyst emphasizes that greater clarity on policy is necessary to fully realize Centene’s potential.

According to TipRanks, Baxter is a 3-star analyst with an average return of 2.0% and a 41.55% success rate. Baxter covers the Healthcare sector, focusing on stocks such as UnitedHealth, Cardinal Health, and Centene.

In another report released on February 6, TD Cowen also maintained a Buy rating on the stock with a $80.00 price target.