CNC: Margin Recovery In Medicaid And Marketplace Will Drive 2026 Earnings Upside

Centene's analyst price target has increased by $5.59 to $45.00, as analysts expect margin recovery in the Marketplace and Medicaid segments to drive accelerated earnings growth, despite ongoing near-term pressures.

Analyst Commentary

Recent research coverage of Centene highlights a mix of positive and negative outlooks, with analyst views divided over the company’s near- and medium-term trajectory. The following summarizes the prevailing themes from recent analyst commentary.

Bullish Takeaways

• Bullish analysts have raised price targets, citing strong Q3 results, upward revisions to earnings guidance, and expectations of margin recovery in both the Marketplace and Medicaid segments over the coming years.
• Improving health benefits ratios, especially with better-than-expected sequential improvement in Medicaid HBR, are seen as supportive of Centene's path to accelerated EPS growth.
• Pricing strategies are largely viewed as effectively addressing risk adjustment concerns in the Marketplace business. This increases confidence in the company’s ability to manage shifts in risk pools through 2026 and beyond.
• Longer-term outlooks anticipate normalization of Medicaid margins by 2027 to 2029, with profitability in Medicaid expected to be consistent with recent guidance.

Bearish Takeaways

• Bearish analysts caution that Centene may face ongoing earnings pressure related to deteriorating Medicaid trends and contract losses, such as the recent loss of Florida’s Children's Medical Services program. This could impact earnings power by around 3%.
• There is concern over industry-wide challenges in managed care underwriting, with some expecting the most significant downturn experienced in over 15 years. This has led to a more cautious stance on Centene’s near-term valuation.
• Some expect Medicaid margin headwinds to persist through 2026, with a longer path to recovery in both Medicaid and healthcare exchange segments. This could potentially constrain growth and valuation.
• Additional commentary suggests risk around Centene’s 2025 and 2026 earnings expectations, as adverse Medicaid developments may not be fully reflected in current outlooks.

What's in the News

• Approximately 24 million Americans enrolled in Affordable Care Act plans are seeing an average premium increase of 26% for 2026, affecting Centene and its peers in the health insurance market (Wall Street Journal).
• Enhanced subsidies for ACA health-insurance plans are set to expire by year-end. Decisions about their extension are playing a key role in ongoing government shutdown negotiations, and the outcome could directly impact Centene and other major insurers (Wall Street Journal).
• Centene announced that Ambetter will offer a variety of affordable health insurance plans in Arizona, Mississippi, and Georgia for the 2026 plan year. Open enrollment runs from November 1, 2025, through January 15, 2026.
• The company recorded a non-cash goodwill impairment charge of $6.7 billion in the third quarter of 2025.
• Centene updated its 2025 earnings guidance and is forecasting a diluted loss per share not to exceed $12.85.

Valuation Changes

• Fair Value Estimate has decreased modestly, moving from $39.76 to $39.41 per share.
• Discount Rate has risen slightly, increasing from 7.34% to 7.37%.
• Revenue Growth Expectation has fallen, changing from 4.97% to 4.66%.
• Net Profit Margin projection has declined, shifting from 1.16% to 1.01%.
• Future P/E Ratio estimate has increased notably, rising from 9.91x to 12.02x.