Centene's 40% Crash: Generational Buy Or Value Trap?

Summary

  • Centene's 40% drop after pulling 2025 guidance is driven by rising medical costs and margin pressure, but the sell-off appears overdone.
  • Historical patterns show that similar sell-offs in 2016 and 2020 were followed by recoveries as premiums were adjusted upward.
  • Valuation is now highly attractive, with Price/Cash Flow below 8, making CNC stock a compelling buy despite sector volatility.
  • Upcoming catalysts include Q2 earnings, regulatory filings, and potential policy changes. The worst-case scenario seems priced in, setting up for a recovery.
  • This idea was discussed in more depth with members of my private investing community, The Pragmatic Investor. Learn More »

Falling down red financial chart background. 3D Rendering

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Thesis Summary

Centene Corporation (NYSE:CNC) has fallen over 40% after pulling its guidance for 2025. The stock is facing a short-term challenge that will have a meaningful impact on margins.

Medical costs are rising, and this means Centene has

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This article was written by

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James Foord is an economist by trade and has been analyzing global markets for the past decade. He leads the investing group The Pragmatic Investor where the focus is on building robust and truly diversified portfolios that will continually preserve and increase wealth.

The Pragmatic Investor covers global macro, international equities, commodities, tech and cryptocurrencies and is designed to guide investors of all levels in their journey. Features include a The Pragmatic Investor Portfolio, weekly market update newsletter, actionable trades, technical analysis, and a chat room. Learn more.

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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