Centene Earnings: Sticks to 2024 Outlook Despite Challenges in Medicaid and Medicare Markets

Narrow-moat Centene turned in solid fourth-quarter results that allowed it to slightly exceed management's expectations on the bottom line in 2024 for at least $6.60 of adjusted EPS (actual was $6.68). Management also maintained its previous 2024 guidance of at least $6.70 in adjusted EPS, despite rising medical utilization that pushed its medical cost ratio up to the high end of its target range in 2023 and despite ongoing Medicaid and Medicare Advantage challenges. Overall, we are maintaining our $92 fair value estimate and continue to view Centene shares as moderately undervalued.