Centene (CNC – Free Report) is one of the largest managed care providers in the US, serving over 12 million people in 14 states.

In addition to being the largest Medicaid Managed Care Organization in the country, Centene is also the largest carrier on the Health Insurance Marketplace and a national leader in managed long-term services and supports.

Centene delivered another strong quarter and outlook on February 6 and analysts responded by raising 2018 full-year earnings estimates 21% from $5.86 to $7.09. The 2019 consensus also vaulted 23% from $6.63 to $8.17.

And this followed the solid company news just a few months ago. Here’s what I wrote on December 19…

The company held its annual Investor Day on December 15 and several analysts came away increasingly bullish on the stock. Here’s was the word from investment bank Piper Jaffray where their price target on CNC was boosted from $112 to $134…

Piper Jaffray analyst Sarah James raised her price target for Centene to $134 saying the company’s investor day “did not disappoint with a material guidance boost.” Despite rallying 68% year-to-date, Centene is still the best buying opportunity in the group with potential for earnings upside and multiple expansion “once the market moves past the worst case scenario on reform,” James told investors in a research note.

James also sees large scale reform as unlikely and the impact of block grants, which she views as likely, as being a “significant positive” for Centene and managed Medicaid.

Guidance Raised Again on Anticipated Deal Closing

At the December event, Centene provided a 2018 outlook with adjusted EPS of $5.47 to $5.87, vs a Wall Street consensus $5.50 to $5.55.The company saw 2018 revenue of $60.0 to $60.8 billion, vs the consensus of $54.95 billion.

Management also provided an update on their recent proposed $3.75 billion acquisition of Fidelis Care which would give the company significant new exposure to the New York market. Since the deal had not yet closed, analysts had to speculate on the impact of new revenues and synergies.

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