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Saint Louis, Missouri-based Centene Corporation (CNC) operates as a healthcare enterprise, providing programs and services to underinsured and uninsured families, commercial organizations, and military families. With a market cap of $31.6 billion, Centene operates through Medicaid, Medicare, Commercial, and Other segments.
Centene has substantially underperformed the broader market over the past year. CNC stock has plummeted 15.8% on a YTD basis and 12.9% over the past 52 weeks, lagging behind the S&P 500 Index’s ($SPX) surge of 25.2% on a YTD basis and 36.4% over the past year.
Zooming in further, CNC has also lagged behind the SPDR S&P Health Care Services ETF’s (XHS) 10.3% gains on a YTD basis and 20.1% returns over the past year.
Shares of Centene rose 4.2% after the release of its better-than-expected Q3 earnings on Oct. 25. The company exceeded Wall Street’s topline estimates by 10.9%, recording a 10.5% year-over-year growth in total revenues to $42 billion, primarily driven by the 22% increase of membership in the marketplace and 49% increase in medicare prescription drug plans. Furthermore, Centene gave a robust full-year revenue guidance of $159 billion to $161 billion, bolstering investors’ confidence.
However, Centene has observed a decrease in profitability, with its adjusted net earnings plunging 21.5% year-over-year to $849 million. Following the initial uptick in prices, CNC stock dipped 4% in the next trading session.
For the current fiscal year, ending in December, analysts expect Centene to report a 2.3% year-over-year growth in adjusted EPS to $6.83. The company’s earnings surprise history is mixed. It surpassed Wall Street’s bottom-line estimates in three of the past four quarters while missing on one other occasion. Its adjusted EPS of $1.62 for the last reported quarter surpassed analysts’ estimates by a notable 16.6%.
CNC stock has a consensus “Moderate Buy” rating overall. Among the 17 analysts covering the stock, eight recommend “Strong Buy,” and nine advise a “Hold” rating.
This configuration has been mostly stable over the past months.
On Oct. 30, Bernstein analyst Lance Wilkes maintained an “Outperform” rating on CNC but lowered the target to $88.
CNC’s mean price target of $82.18 represents a premium of 31.4% to current price levels. Meanwhile, the street-high target of $95 suggests a massive potential upside of 52%.
On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
