In a report published Friday, Sterne Agee analyst Brian Wright initiated coverage on Centene (NYSE: CNC) with a Buy rating and $87.00 price target.
In the report, Sterne Agee noted, “Centene has become the premier Medicaid pure-play and deserving of its premium multiple to the group. Plus we expect further earnings upside. We believe non-pharmacy medical costs are likely to remain muted for the Medicaid population as new markets/members represent a smaller percentage of the business in '14, and this should offset higher specialty pharmacy costs near-term.
"Longer-term we expect state Medicaid reimbursement to reflect these higher cost treatments, and appropriate clinical guidelines will also help to reduce the cost pressure on the Medicaid program. We see '15 as more of a timing risk relative to Hepatitis C-related therapies reimbursement given actuarial soundness requirements.”
Centene closed on Thursday at $74.83.
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