Centene Corp (NYSE:CNC) Upgraded to Outperform

Centene Corp (NYSE:CNC) stock rose 0.53% (As on June 22, 11:12:40 AM UTC-4,Source: Google Finance) after Credit Suisse Upgrades Centene to Outperform from Neutral, Lifts price target to $88 from $86; saying its headwinds are already priced in and that it could climb another 10% from its current price.

Meanwhile, Centene is boosting its guidance for the year as it continues its value-creation project. The insurer launched its value-creation plan about a year ago, and, under the initiative, it is taking a closer look at its real estate holdings. Real estate was identified as a focus as the company shifted to a more flexible work environment due to the pandemic. The company expects to incur $750 million to $800 million in impairments as it slims down its leased space, as well as $750 million to $850 million in owned space. The costs will be recorded likely in the second and third quarters of this year and will sit outside of earnings per share. Centene said it expects to decrease expenses for leased real estate by an $180 million to $200 million annualized run rate. For 2022, the Company has increased its Premium and Service Revenues guidance range by $2.0 billion to a new range of $134.3 billion to $136.3 billion and has increased its Adjusted Diluted EPS guidance range by $0.15 to a new range of $5.55 to $5.70. The company is betting on higher premiums from its government-backed Medicaid health insurance plans. The company has performed well on the federal Obamacare marketplace – where it offers insurance plans – so far in the second quarter

In addition, in preparation for the Magellan Rx and PANTHERx divestitures, as well as planning for the future, the Company also announced today that its Board of Directors has authorized a $3.0 billion increase to the Company’s existing stock repurchase program and a new $1.0 billion debt repurchase program. The Company repurchased $200 million of stock in May 2022 and currently has $3.6 billion of authorization remaining. Centene said last month it would sell the units for about $2.8 billion as part of its strategy to exit the pharmacy benefit management space. The company has has signed a definitive agreement to sell Magellan Rx to Prime Therapeutics LLC (Prime) and a separate definitive agreement to sell PANTHERx Rare to a consortium of The Vistria Group, General Atlantic, and Nautic Partners.

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