UPDATE: Deutsche Bank Raises PT on Centene on Continued Margin Pressure
In a report published Wednesday, Deutsche Bank reiterated its Hold rating on Centene Corp. (NYSE: CNC), and raised its price target from $38.00 to $40.00.
Deutsche Bank noted, “Margins remain under pressure in both new and existing markets in 4Q. Centene's performance in 2012 clearly demonstrated that accelerating revenue growth in Medicaid can often drive a significant decline in EPS. Indeed, while revenue growth exceeded 62% in 2012, operating EPS compressed by nearly 90%. What we found most notable about the new disclosures included in the 4Q report was that gross margins in existing markets actually deteriorated at a faster pace than margins in the new expansion markets. We are reducing our 2013 EPS estimate further below guidance and also trim our 2014 estimate. Maintain Hold with robust top-line growth offset by continued margin pressure in new and existing markets.”
Centene Corp. closed on Tuesday at $44.99.
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