Trump's new law is a heavy blow to the healthcare sector! Bank of America downgrades Centene (CNC.US) and HCA Healthcare (HCA.US) ratings.

Bank of America Corp has downgraded the ratings of healthcare management company Centene (CNC.US) and hospital operator HCA Healthcare (HCA.US), citing concerns about the impact of the recently signed "Big Beautiful Act" by President Trump. Bank of America analyst Joanna Gajuk downgraded Centene, a leading company in the Medicaid market, from a "neutral" rating to "underperform", and significantly lowered the target price from $52 per share to $30. The analyst noted that the passage of the act will slow down the growth of the company in the Medicaid and Affordable Care Act (ACA) exchange markets, and increase the likelihood of the exchange subsidy expiring this year. Gajuk stated, "Given the significant changes in the risk pool, we expect the downside risk for exchange pricing in 2026 to outweigh the upside potential," she added, "As reform measures such as work requirements in the reconciliation bill are implemented, adverse factors for Medicaid enrollment will start to show from 2027." Gajuk also downgraded the rating of the largest for-profit hospital operator in the U.S., HCA Healthcare, from "buy" to "neutral", with a slight target price adjustment from $410 per share to $394, pointing out that cuts in funding for ACA exchanges and Medicaid will bring headwinds. "As enrollment numbers decrease, it could lead to slower growth in hospital visits and an increase in bad debts," the analyst wrote, but also noted that compared to competitors, HCA Healthcare is less affected by adverse factors, and its scale advantage will help it better mitigate the impact. "We believe that the act significantly increases the likelihood of exchange subsidy enhancements expiring, which will create additional headwinds in 2026," the analyst added.