Centene (CNC) is seeing clear early signs of recovery this year after a disruptive 2025, RBC Capital Markets said in a note Tuesday.

Centene is progressing past a recent EPS trough, backed by factors including a Q1 adjusted EPS beat and a guidance raise to more than $3.40, which confirm that its "multi-year recovery is underway," according to the note.

RBC said it expects the company's Medicaid margin recovery to proceed as rates are catching up to medical cost trends.

The investment firm said it is also "encouraged" by the company's Marketplace margin outlook following pricing actions across Centene's Affordable Care Act book. It sees "tangible upside to 2026 EPS guidance if risk adjustment receivables hold."

RBC noted, however, Centene's shares appear to be "appropriately pricing in the recovery at current levels" after rising roughly 100% since the end of March.

The firm initiated coverage of Centene with a Sector Perform rating and a $70 price target.

Price: 63.51, Change: -0.17, Percent Change: -0.27