Centene Corporation Struggles Despite Strong Earnings Report
Company Overview and Market Position
Centene Corporation (CNC), a prominent healthcare company, aims to provide affordable healthcare solutions for families across the United States. Based in St. Louis, Missouri, it manages a wide array of health plans and services, primarily focusing on government-sponsored programs like Medicaid, Medicare, and the Health Insurance Marketplace. Centene boasts a market cap of $30.9 billion and remains committed to innovation and accessible care while striving to enhance health outcomes in diverse communities.
Stock Performance: A Year of Decline
Over the past year, Centene’s stock has notably underperformed against broader market trends. CNC shares have dropped 18% in the last 52 weeks, with only slight gains on a year-to-date (YTD) basis, especially when compared to the S&P 500 Index ($SPX), which saw a 22.6% increase over the same period and a 3.1% rise YTD.
Comparative Lag Behind Peers
When evaluated against the SPDR S&P Health Care Services ETF (XHS), Centene also fell short, with the ETF returning 18.4% over the past year and 13.6% YTD.
Earnings Report Highlights and Future Projections
Several factors have hindered Centene’s share price performance, including concerns about profitability, challenges within the sector, and increasing medical costs. Following its Q4 earnings release on Feb. 4, the stock faced a 5.5% decline. Centene revealed a 3.4% rise in revenue compared to the previous year, totaling $40.81 billion, exceeding expectations by 4.4%. Meanwhile, adjusted EPS grew by 62.2% to $0.80, and adjusted EBITDA reached $520 million, outpacing forecasts. The operating margin held steady at 0.4%, consistent with the previous year. Centene’s customer base slightly decreased to 28.6 million, down from 28.64 million a quarter before. For fiscal 2025, the company has set a minimum adjusted EPS guidance of $7.25, while the average expectation stands at $7.32.
For the current fiscal year, ending in December 2025, analysts predict a 1.1% year-over-year increase in CNC’s EPS to $7.25. Centene’s earnings history shows a mixed performance; the company exceeded Wall Street’s estimates in three of the last four quarters but fell short in one instance.
Analyst Ratings Point to Cautious Optimism
Among the 17 analysts following Centene, the consensus rating is a “Moderate Buy.” This rating includes 10 “Strong Buys,” six “Holds,” and one “Moderate Sell.” This outlook shows improvement compared to three months ago, when there were only eight “Strong Buy” ratings.
Price Targets Indicate Potential Upside
On Feb. 5, Andrew Mok, CFA from Barclays (BCS), reaffirmed a “Buy” rating for Centene, suggesting a price target of $93 – the highest on the Street – indicating a potential upside of 53.1%. The mean price target of $78.09 suggests a premium of 28.6% compared to the stock’s current price.
On the date of publication, Rashmi Kumari did not hold (either directly or indirectly) any positions in the securities mentioned in this article. All information and data in this article are solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
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The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.
