© Reuters. Washington “noise” a buying opportunity for Centene – Morgan Stanley
- The selloff in Centene (CNC -4.5%) from the Trump administration’s plan to terminate health insurance subsidies to insurers is “exaggerated” according to Morgan Stanley (NYSE:MS). Shares were down almost 11% before before bargain hunters jumped in.
- In note, analyst Gary Taylor says investors “misunderstood” the potential impact from the “Washington-driven noise,” citing expected legal challenges that will keep the money flowing and the fact that Centene has submitted two bids in most markets, one assuming cost-sharing reduction (CSR) subsidies and one without, with the ability to change mid-year if CSR funding changes.
- Centene’s exchange exposure is only ~8%, with only 60% of those receiving CSRs.
- He also reiterates that most states already asked insurers to load CSR costs into their 2018 bids or submit backup bids if the funding was discontinued.
- Source: Bloomberg
- Previously: Centene down 7% premarket on Trump order to end ACA subsidies (Oct. 13)
- Now read: Valuation Dashboard: Healthcare – Update