What’s ahead for Centene: Wells Fargo

Centene (CNC +12.4%) is riding high after Joe Biden’s performance on Super Tuesday sets him up as the betting favorite to take on Donald Trump in the fall.

Wells Fargo is looking beyond the political drama to weigh in on a couple of other developments to watch with Centene. First, WF warns that a rate cut in New York could cut into Centene’s CNC earnings by $150M. “The rate cut would be retroactive to January 1 and about half of the $200 million is tied to CNC’s quality bonus, as the state is proposing ending the quality bonus program. While not yet finalized, CNC has already started to identify offsets ($50 million identified thus far in corporate) and develop initiatives to mitigate the impact,” updates the firm.

Wells also has its eyes on the coronavirus outbreak in the U.S. The analysts team says that while the potential impact from COVID-19 on Centene remains uncertain, it reminds that a large portion of CNC’s membership (~94%) is likely young enough to be considered in the lower risk categories or COVID-19.

Wells Fargo keeps an Outperform rating on Centene after factoring in the latest developments.

https://seekingalpha.com/news/3548670-wells-fargo-stays-positive-on-centene