Centene Corp is one of the dominant players in healthcare services. Presently the stock’s valuation is $38 billion on the market. Centene is the largest provider of government-sponsored health plans in the U.S., with approximately 22 million members.
The company employs more than 33,000 people across the country. It has health plans for 12.3 million members in 29 states, as well as offering health insurance to other healthcare and commercial organizations.
The stock’s fourth-quarter revenue was $18.9 billion, rising by 14% after the last year’s $16.6 billion. The data has surpassed the experts’ estimates of $18.43 billion.
However, Centene’s medical benefit ratio, the percentage of health insurance premiums paid out in claims, was higher than the investors expected. Wall Street’s analysts estimated 87.6% when, in reality, it reached 88.4% and thus negatively impacted the company’s medical costs.
Why do the experts advise to buy this stock?
The main reason is that the stock is trading at a relatively low price just now. Gary Taylor, J.P. Morgan’s analyst, also pointed out that Centene bought WellCare for $17 billion in March last year, which will boost the stock’s long-term value.
The U.S. economy may face some uncertainties due to the nearing presidential elections. Nevertheless, experts think that this stock will manage to weather it all without significant losses.
Taylor raised Centene’s price target, setting it at $88. If the target is met, investors will gain 33% over the next year. The analyst believes that the stock is destined to rise further, as managed care penetration of Medicaid grows from 68% of spending towards 75-80% during the next decade.
Other Wall Street analysts seem to share the sentiment. They agree that Centene is the strong-buy at $80.54, the average target angling to 24% upside. According to the experts, CNC’s organic opportunity remains above-average for the sector.