Is Centene Stock Underperforming the Nasdaq?

Valued at a market cap of $28.6 billion, Centene Corporation (CNC) is a healthcare enterprise that provides programs and services to under-insured and uninsured families, commercial organizations, and military families in the United States. The Saint Louis, Missouri-based company also engages in providing education and outreach programs to inform and assist members in accessing quality, appropriate healthcare services. 

Companies worth $10 billion or more are generally described as “large-cap” stocks, and CNC fits right into that category. The company is committed to helping people live healthier lives and has been operating government-sponsored healthcare programs for over 30 years.

Despite its strengths, the managed care company’s shares have slipped 30.1% from its 52-week high of $81.42 reached on Feb. 26. Over the past three months, CNC has declined nearly 22.6%, significantly lagging behind the broader Nasdaq Composite’s ($NASX) 15.2% gains. 

Moreover, In the longer term, CNC has declined 23.4% over the past 52 weeks, significantly lagging behind NASX’s 38.8% returns. On a YTD basis, shares of CNC are down 23.3%, massively underperforming NASX’s 33.5% gains over the same time frame.

To confirm its bearish trend, CNC has been trading below its 200-day moving average since early October and has remained below its 50-day moving average since late September. 

On Oct. 25, CNC shares jumped 4.2% after the release of its better-than-expected Q3 earnings results. Its revenue grew 10.5% year-over-year to $42 billion and exceeded the forecasted figure by 10.9%. The top-line growth can be primarily attributed to strong commercial revenue growth, a significant increase in Marketplace and Medicare Prescription Drug Plans membership, and rising premiums. But, on the other hand, its adjusted earnings declined 19% annually to $1.62. However, it outpaced the consensus estimates by a massive 16.6%. 

Yet, CNC has outpaced its rival, Humana Inc. (HUM), which declined 41.6% over the past 52 weeks and 39.2% on a YTD basis. 

Despite CNC’s recent underperformance, analysts remain moderately optimistic about its prospects. The stock has a consensus rating of “Moderate Buy” from the 17 analysts covering it, and the mean price target of $79.94 suggests a massive 40.5% premium to its current levels.