Jefferies has revised its price target for Centene (CNC, Financial), reducing it from $64 to $61 while maintaining a Hold rating on the stock. According to the analyst, Centene delivered some of the most promising results in the Health Insurance Exchange sector during the first quarter compared to its competitors. Despite these positive results, there are concerns about underlying utilization pressures, and significant measures are needed to maintain the company's earnings per share guidance, as noted in a post-earnings announcement.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 16 analysts, the average target price for Centene Corp (CNC, Financial) is $77.28 with a high estimate of $91.50 and a low estimate of $64.00. The average target implies an upside of 29.95% from the current price of $59.47. More detailed estimate data can be found on the Centene Corp (CNC) Forecast page.
Based on the consensus recommendation from 20 brokerage firms, Centene Corp's (CNC, Financial) average brokerage recommendation is currently 2.4, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Centene Corp (CNC, Financial) in one year is $94.19, suggesting a upside of 58.38% from the current price of $59.47. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Centene Corp (CNC) Summary page.
CNC Key Business Developments
Release Date: April 25, 2025
- Adjusted Diluted EPS (Q1 2025): $2.90
- Full Year 2025 Adjusted EPS Expectation: Greater than $7.25
- Premium and Service Revenue (Q1 2025): $42.5 billion
- Medicaid Membership: Stable at 12.9 million to 13 million members
- Medicaid HBR (excluding excess influenza costs): Approximately 93%
- Medicare Advantage and PDP Membership: Outperformed expectations, contributing $1 billion to 2025 revenue guidance
- Commercial Segment HBR (Q1 2025): 75.0%
- Adjusted SG&A Expense Ratio (Q1 2025): 7.9%
- Cash Flow from Operations (Q1 2025): $1.5 billion
- Debt-to-Adjusted EBITDA (Q1 2025): 2.8 times
- Medical Claims Liability (Q1 2025): $19.9 billion
- Days in Claims Payable (Q1 2025): 49 days
- Full Year 2025 Premium and Service Revenue Guidance: Midpoint of $165 billion, up from $159 billion
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Centene Corp (CNC, Financial) reported strong premium and service revenue of $42.5 billion for Q1 2025, indicating a good start to the year.
- The company maintained its full-year 2025 adjusted EPS outlook of greater than $7.25, reflecting confidence in its financial performance.
- Centene Corp (CNC) experienced better-than-expected Medicare Advantage membership retention, contributing an additional $1 billion to its 2025 revenue outlook.
- The Commercial segment, including the Marketplace business, showed strong growth with higher-than-anticipated new enrollment and retention.
- Centene Corp (CNC) secured key Medicaid contract wins in Illinois and Nevada, expanding its service footprint and demonstrating the competitiveness of its service model.
Negative Points
- The company faced $130 million in unexpected medical expenses due to a more active flu season, impacting Medicaid performance.
- Medicaid rates, while showing progress, are still inadequate in certain areas, such as long-term care and high-cost drugs, indicating ongoing challenges in rate alignment.
- The Medicare segment's HBR is expected to follow an inverted slope line due to Inflation Reduction Act changes, leading to lower earnings later in the year.
- High utilization of specialty drugs in the PDP segment is causing pressure, although partially mitigated by a risk corridor.
- Centene Corp (CNC) is facing challenges with potential policy changes, including the expiration of enhanced premium tax credits and new marketplace integrity rules, which could impact future market dynamics.
