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Reassessing Centene (CNC) Valuation After ACA Subsidy Uncertainty and Legal Scrutiny on 2025 Outlook

Simply Wall St · 1d ago

Centene (CNC) is back in the spotlight after a sharp selloff tied to two pressure points: fresh doubts over Affordable Care Act subsidies and new legal scrutiny of its withdrawn 2025 outlook.

See our latest analysis for Centene.

That backdrop helps explain why, despite a solid 90 day share price return of 19.14% from a recent low, Centene’s year to date share price return of negative 35.51% and three year total shareholder return of negative 52.20% show momentum has been fragile rather than firmly rebuilt.

If the volatility around Centene has you reassessing your healthcare exposure, this could be a good moment to explore other healthcare stocks that might better balance risk and opportunity.

With the stock trading near analysts’ fair value, but at a steep discount to some intrinsic models despite shaky earnings and legal overhangs, is Centene now a contrarian buying opportunity, or is the market rightly pricing in weaker growth ahead?

Most Popular Narrative: 2.3% Undervalued

With Centene last closing at $39.02 versus a narrative fair value of $39.94, the prevailing view sees modest upside anchored in improving profitability.

The analysts have a consensus price target of $33.562 for Centene based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $70.0, and the most bearish reporting a price target of just $24.0.

Read the complete narrative.

Want to see what kind of revenue path, margin reset and earnings power justify this fair value, even with that wide target spread? The full narrative reveals the detailed playbook behind those assumptions.

Result: Fair Value of $39.94 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, policy uncertainty around ACA subsidies and rising specialty drug costs could pressure margins and undermine the modest upside implied in today’s fair value.

Find out about the key risks to this Centene narrative.

Build Your Own Centene Narrative

If you see the story differently or want to stress test the assumptions with your own numbers, you can build a custom view in minutes: Do it your way.

A great starting point for your Centene research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.