Centene Succeeds in California Medicaid Protest; Shares Fairly Valued

In a positive turn of events, narrow-moat Centene succeeded in its protest to serve Medicaid members in key California counties, including Los Angeles and Sacramento. The firm may have to share those counties with other winners, though, like half of Los Angeles county with Molina. Considering some of those details, our fair value estimate has not changed materially. However, overall, we see this as a positive development that could mildly improve the firm's near-term earnings prospects. For example, management highlighted that the floor on its new 2024 earnings target is now $7.15 per share versus $7 when considering this development.