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Oppenheimer analysts believe it is time to care about managed care once again.
The firm favors a basket approach to the group, with stocks such as Centene (NYSE:CNC), Cigna Corp (NYSE:CI), Humana (NYSE:HUM) and UnitedHealth Group (NYSE:UNH) among its favorite targets.
The analysts stated in their note to clients that following two strong years for managed care, the group’s stock performance has “significantly lagged” the overall market this year.
Oppenheimer believes this is primarily driven by several overhangs, including MA policy, questions around the timing of the PHE, and uncertainty around 2023 guidance.
However, the analysts said that while “most of the overhangs have now passed,” the sector has remained under pressure, which they believe is “largely due to rotation into the ‘risk-on’ stocks, leaving the defensive-oriented healthcare stocks as a source of funds.”
“Nevertheless, we believe the end of the selling should come in short order, especially as the group’s fundamentals remain quite strong, with earnings/guidance remaining on a strong trajectory and utilization remaining stable,” the analysts added. “Furthermore, following the underperformance in the group, valuations appear increasingly attractive.”
