Centene (CNC) has drawn fresh attention as investors weigh its recent stock moves and underlying business momentum. Shares have gained 24% over the past month, prompting a closer look at what is driving sentiment around the healthcare company.
Centene’s impressive 24% jump over the past month stands out against a backdrop of lackluster long-term returns, with a 1-year total shareholder return of -0.49%. That kind of price momentum is fueling renewed interest in the stock, even as its broader performance signals there may still be some skepticism in the market about Centene’s growth story or risk profile.
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Given Centene’s mixed record and recent surge, the big question is whether the stock remains undervalued and poised for further gains, or if markets have already factored in all the future growth potential.
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Most Popular Narrative: 8.5% Overvalued
Centene’s widely followed narrative sets a fair value below the current price, highlighting analyst skepticism compared to the stock’s recent momentum.
Analysts expect the number of shares outstanding to decline by 2.72% per year for the next 3 years. To value all of this in today's terms, we will use a discount rate of 7.54%, as per the Simply Wall St company report.
What is the real driver behind this cautious valuation? The narrative hinges on analyst forecasts, with every key assumption—revenue growth, margins, and future multiples—fueling a sharply debated fair value. Find out which numbers spark this tension and why they are shaping Centene’s outlook!
However, persistent hurdles in Medicaid funding and unforeseen spikes in medical costs could quickly undermine the case for Centene’s narrative-driven valuation.
Another View: Market Multiples Paint a Different Picture
While analyst models point to Centene as somewhat overvalued, a comparison of its price-to-earnings ratio tells another story. Centene trades at just 8.8 times earnings, far below both the US Healthcare industry average of 21.4x and the peer average of 24x. Its ratio is also well under the so-called fair ratio of 38.2x. This gap could indicate there is upside the market is missing, or it could signal risks that are not reflected in the multiples. Which side will prove right?
If you think the numbers tell a different story, or want to test your own assumptions, you can easily shape your own verdict on Centene in just a few minutes. Do it your way.
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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.
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