CNC

Centene Corp

Healthcare


Presented:12/11/2018
Price:$66.42
Cap:$27.28B
Current Price:$68.48
Cap:$36.02B

Presented

Date12/11/2018
Price$66.42
Market Cap$27.28B
Ent Value$36.83B
P/E Ratio27.67x
Book Value$26.00
Div Yield0%
Shares O/S410.71M
Ave Daily Vol3,070,098
Short Int2.15%

Current

Price$68.48
Market Cap$36.02B
Centene Corp. engages in the provision of programs and services to government sponsored healthcare programs. It operates through the Managed Care and Specialty Services segments. The Medicaid Managed Care segment provides health plan coverage to individuals through government subsidized programs through Medicaid. The Specialty Services segment offers healthcare services and products to state programs, correctional facilities, healthcare organizations, employer groups, and other commercial organizations. The company was founded in 1984 and is headquartered in St. Louis, MO.

Please note, this stock split on 02/07/2019 at a ratio of 2/1. The presented data has been updated to account for the change, however, the text of the note may refer to data based on the original presented price of $132.83.

Publicly traded companies mentioned herein: Centene Corp (CNC), Humana Inc (HUM), Molina Healthcare Inc (MOH), WellCare Health Plans Inc (WCG)

Highlights

The recent declines seen in the stock prices of Medicaid Managed Care companies (Centene, Molina, and WellCare) has created a buying opportunity, in the presenter's opinion. Concerns about exchange sign ups and related margins are overblown, and while 20% - 30% of Centene’s (CNC’s) earnings are tied to marketplace exchanges, this risk should be baked into expectations (i.e., it is assumed that exchange signups will be lower, as the Trump administration hasn’t supported exchange participation to the degree that Obama’s did). Regardless, at ~$133 CNC looks cheap at 19x expected full-year 2018 EPS and 16x forward estimates ($8.35/share). If the presenter’s model is accurate, $10.50 of 2020 EPS should be easily achievable, making for a favorable risk/reward setup (at 17x this 2020 estimate, the implied upside is >30%). Please note, Centene’s Investor Day is scheduled for Friday, December 14.

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Idea Discussion

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