Shares of Managed Care Organizations and hospital names jumped on Wednesday after Joe Biden rolled to victories across the South, Midwest and New England on the biggest day of voting in the Democratic presidential nomination campaign. However, Bernie Sanders, a leading proponent of "Medicare for All," took California, setting up a one-on-one battle against the former vice president.
SANDERS-BIDEN SHOWDOWN SET UP: Joe Biden won nine of 14 states voting on "Super Tuesday," including Texas and Massachusetts. Meanwhile, Bernie Sanders took Colorado, Utah, Vermont and California. Maine was still a toss-up, with both Biden and Sanders winning a third of the vote with 85% of the precincts reporting. The former vice president's comeback has sent Managed Care Organization and hospital stocks like Anthem (ANTM), Centene (CNC), CVS Health (CVS), Humana (HUM), Molina Healthcare (MOH), UnitedHealth (UNH), Community Health (CYH), and Tenet (THC) higher on Wednesday trading.
This morning, Mike Bloomberg announced via Twitter, "Three months ago, I entered the race to defeat Donald Trump. Today, I'm leaving for the same reason. Defeating Trump starts with uniting behind the candidate with the best shot to do it. It's clear that is my friend and a great American, @JoeBiden...I'm immensely proud of the campaign we ran. I'm deeply grateful to all the Americans who voted for me, and to our dedicated staff and volunteers. I want you to stay engaged, active, and committed to our issues. I will be right there with you. And together, we will get it done."
POSITIVE CATALYST WATCH: Meanwhile, Citi analyst Ralph Giacobbe opened a "positive catalyst watch" on shares of Centene, saying the weaker than expected 2020 guidance coupled with the Super Tuesday primary outcome are "somewhat of a clearing event for the stock." The guidance is no worse than what has been previously communicated and has potential upside given better interest cost than initially assumed, Giacobbe told investors in a research note. Moreover, the Democratic Party coalescing and providing some momentum around Joe Biden is disproportionally favorable to Centene given Biden's approach to building on the Affordable Care Act, the analyst added. He kept a Buy rating and a $72 price target on the shares.
CENTENE ISSUES GUIDANCE: On Tuesday, Centene said it sees fiscal year 2020 adjusted earnings per share of approximately $4.56-$4.76 and revenue between $104.8B-$105.6B, with consensus at $4.82 and $106.8B, respectively. The updated 2020 financial guidance incorporates the effect of the closing of the WellCare acquisition on January 23. Prior fiscal year 2020 view was adjusted earnings per share of $4.64-$4.84, and revenue of $78.6B-$79.4B.
Centene also sees fiscal 2020 health benefits ratio of approximately 85.9%-86.3%; selling, general and administrative expense ratio of approximately 9.3%-9.7%; adjusted SG&A expense ratio of approximately 8.9%-9.3%, which excludes approximately $385M of acquisition related expenses; and effective tax rate of approximately 38.0%-40.0%, including the effect of the Health Insurer fee.
PRICE ACTION: In morning trading, shares of UnitedHealth have gained almost 10% to $286.43, while Centene's stock has jumped about 12% to $60.43. Also higher are Anthem, CVS, Humana, Molina Healthcare, Community Health, and Tenet Healthcare.
Ticker changed to ELV
+34.21 (+13.34%)
Centene
+6.05 (+11.19%)
CVS Health
+3.75 (+6.00%)
Humana
+35.46 (+10.88%)
Molina Healthcare
+15.56 (+12.71%)
UnitedHealth
+25.5 (+9.76%)
Community Health
+0.185 (+3.70%)
Tenet Healthcare
+2.2 (+8.53%)