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Here's Why Investors Must Hold on to Centene (CNC) Stock Now
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Centene Corporation (CNC - Free Report) is currently supported by improved premium and service revenues, Medicaid contract wins, a growing Marketplace business and a commendable financial position.
Zacks Rank & Price Performance
Centene currently carries a Zacks Rank #3 (Hold).
The stock has gained 2.4% in the past year compared with the industry’s 2.2% growth.
Image Source: Zacks Investment Research
Favorable Style Score
CNC is well-poised for progress, as evidenced by its impressive VGM Score of A. Here, V stands for Value, G for Growth and M for Momentum, and the score is a weighted combination of all three factors.
Rising Estimates
The Zacks Consensus Estimate for Centene’s 2024 earnings per share (EPS) is pegged at $6.82, indicating an improvement of 2.1% from the year-earlier reading. The consensus mark for 2025 earnings is pegged at $7.56 per share, suggesting 10.7% growth from the 2024 estimate.
CNC’s bottom line outpaced earnings estimates in each of the trailing four quarters, the average surprise being 10.5%.
A Strong EPS Outlook
Management forecasts adjusted EPS to be greater than $6.80 in 2024, which suggests growth of 1.8% from the 2023 figure.
Key Drivers
Centene’s revenues are driven by a strong customer base in its Medicaid and Medicare businesses, which, in turn, boost premiums. This bodes well since premiums are the most significant top-line contributor for a health insurer. Despite an uptick in Medicaid claims in the first quarter of 2024 and April and persistent rate mismatch, the business is expected to benefit from refreshing rates. The strength of these businesses has fetched several contract wins and renewed agreements to CNC, which are another means to boost membership growth. Strong investment income also bodes well for the insurer. As the demand for Medicaid and Medicare continues to grow, the Federal government will look for managed care companies to help lower costs, benefiting CNC.
A specialized services prowess has enabled Centene to establish and strengthen relationships with members and providers, as well as deliver enhanced care to members of government-sponsored programs. An aging U.S. population favors Medicare plans, which is likely to keep sustaining the solid demand for the health insurer’s plans.
CNC’s premium and service revenues improved 4% year over year in the first quarter of 2024. Management anticipates premium and service revenues to be within the range of $135.5-$138.5 billion for 2024.
The ongoing year witnessed CNC receiving Medicaid contracts from the state authorities of Michigan, New Hampshire and Kansas. As additional states expand Medicaid, CNC’s Medicaid business will be able to offset the negative impacts of redetermination. Its Commercial Marketplace business boasts an extensive presence across the United States, serving 4.3 million members as of Mar 31, 2024. CNC expects Marketplace’s pre-tax margins to be within the 5%-7.5% range in 2024. The Marketplace business is likely to benefit from new member growth in the future.
Centene resorts to mergers and acquisitions in a bid to upgrade its capabilities and bolster its nationwide presence. It also resorts to divestitures of underperforming businesses to intensify focus on its Managed Care business. In January 2024, CNC sold Circle Health to Pure Health, as expected in the first quarter. These divestitures are often a means of pursuing share buybacks and paying off debt levels. Needless to say, a lower debt burden induces a decline in interest expenses, which dipped 1.1% year over year in the first quarter and, subsequently, provides an impetus to CNC’s margins.
Centene also boasts a solid financial strength, substantiated by growing cash reserves. As of Mar 31, 2024, cash and cash equivalents increased 2.3% from the 2023-end level.
Stocks to Consider
Some better-ranked stocks in the Medical space are Bioventus Inc. (BVS - Free Report) , Lantheus Holdings, Inc. , and Encompass Health Corporation (EHC - Free Report) . Bioventus currently sports a Zacks Rank #1 (Strong Buy), and Lantheus Holdings and Encompass Health currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Bioventus’ earnings surpassed estimates in three of the last four quarters and missed the mark once, the average surprise being 151.7%. The Zacks Consensus Estimate for BVS’ 2024 earnings is pegged at 27 cents per share, which is nearly 14-fold from the prior-year tally. The consensus mark for revenues suggests an improvement of 6% from the year-ago actual. The consensus mark for BVS’ 2024 earnings has moved 68.8% north in the past 60 days.
Lantheus’ earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 13.6%. The consensus estimate for LNTH’s 2024 earnings and revenues suggests an improvement of 14.1% and 17.2% from the respective 2023 reported number. The consensus estimate for Lantheus’ 2024 earnings has moved 8.4% north in the past 60 days.
Encompass Health’s earnings outpaced estimates in each of the trailing four quarters, the average surprise being 18.7%. The Zacks Consensus Estimate for EHC’s 2024 earnings indicates a rise of 12.6% from the year-ago figure. The consensus mark for revenues suggests an improvement of 10.5% from the prior-year tally. The consensus mark for EHC’s 2024 earnings has moved 0.7% north in the past 60 days.
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Here's Why Investors Must Hold on to Centene (CNC) Stock Now
Centene Corporation (CNC - Free Report) is currently supported by improved premium and service revenues, Medicaid contract wins, a growing Marketplace business and a commendable financial position.
Zacks Rank & Price Performance
Centene currently carries a Zacks Rank #3 (Hold).
The stock has gained 2.4% in the past year compared with the industry’s 2.2% growth.
Image Source: Zacks Investment Research
Favorable Style Score
CNC is well-poised for progress, as evidenced by its impressive VGM Score of A. Here, V stands for Value, G for Growth and M for Momentum, and the score is a weighted combination of all three factors.
Rising Estimates
The Zacks Consensus Estimate for Centene’s 2024 earnings per share (EPS) is pegged at $6.82, indicating an improvement of 2.1% from the year-earlier reading. The consensus mark for 2025 earnings is pegged at $7.56 per share, suggesting 10.7% growth from the 2024 estimate.
CNC’s bottom line outpaced earnings estimates in each of the trailing four quarters, the average surprise being 10.5%.
A Strong EPS Outlook
Management forecasts adjusted EPS to be greater than $6.80 in 2024, which suggests growth of 1.8% from the 2023 figure.
Key Drivers
Centene’s revenues are driven by a strong customer base in its Medicaid and Medicare businesses, which, in turn, boost premiums. This bodes well since premiums are the most significant top-line contributor for a health insurer. Despite an uptick in Medicaid claims in the first quarter of 2024 and April and persistent rate mismatch, the business is expected to benefit from refreshing rates. The strength of these businesses has fetched several contract wins and renewed agreements to CNC, which are another means to boost membership growth. Strong investment income also bodes well for the insurer. As the demand for Medicaid and Medicare continues to grow, the Federal government will look for managed care companies to help lower costs, benefiting CNC.
A specialized services prowess has enabled Centene to establish and strengthen relationships with members and providers, as well as deliver enhanced care to members of government-sponsored programs. An aging U.S. population favors Medicare plans, which is likely to keep sustaining the solid demand for the health insurer’s plans.
CNC’s premium and service revenues improved 4% year over year in the first quarter of 2024. Management anticipates premium and service revenues to be within the range of $135.5-$138.5 billion for 2024.
The ongoing year witnessed CNC receiving Medicaid contracts from the state authorities of Michigan, New Hampshire and Kansas. As additional states expand Medicaid, CNC’s Medicaid business will be able to offset the negative impacts of redetermination. Its Commercial Marketplace business boasts an extensive presence across the United States, serving 4.3 million members as of Mar 31, 2024. CNC expects Marketplace’s pre-tax margins to be within the 5%-7.5% range in 2024. The Marketplace business is likely to benefit from new member growth in the future.
Centene resorts to mergers and acquisitions in a bid to upgrade its capabilities and bolster its nationwide presence. It also resorts to divestitures of underperforming businesses to intensify focus on its Managed Care business. In January 2024, CNC sold Circle Health to Pure Health, as expected in the first quarter. These divestitures are often a means of pursuing share buybacks and paying off debt levels. Needless to say, a lower debt burden induces a decline in interest expenses, which dipped 1.1% year over year in the first quarter and, subsequently, provides an impetus to CNC’s margins.
Centene also boasts a solid financial strength, substantiated by growing cash reserves. As of Mar 31, 2024, cash and cash equivalents increased 2.3% from the 2023-end level.
Stocks to Consider
Some better-ranked stocks in the Medical space are Bioventus Inc. (BVS - Free Report) , Lantheus Holdings, Inc. , and Encompass Health Corporation (EHC - Free Report) . Bioventus currently sports a Zacks Rank #1 (Strong Buy), and Lantheus Holdings and Encompass Health currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Bioventus’ earnings surpassed estimates in three of the last four quarters and missed the mark once, the average surprise being 151.7%. The Zacks Consensus Estimate for BVS’ 2024 earnings is pegged at 27 cents per share, which is nearly 14-fold from the prior-year tally. The consensus mark for revenues suggests an improvement of 6% from the year-ago actual. The consensus mark for BVS’ 2024 earnings has moved 68.8% north in the past 60 days.
Lantheus’ earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 13.6%. The consensus estimate for LNTH’s 2024 earnings and revenues suggests an improvement of 14.1% and 17.2% from the respective 2023 reported number. The consensus estimate for Lantheus’ 2024 earnings has moved 8.4% north in the past 60 days.
Encompass Health’s earnings outpaced estimates in each of the trailing four quarters, the average surprise being 18.7%. The Zacks Consensus Estimate for EHC’s 2024 earnings indicates a rise of 12.6% from the year-ago figure. The consensus mark for revenues suggests an improvement of 10.5% from the prior-year tally. The consensus mark for EHC’s 2024 earnings has moved 0.7% north in the past 60 days.