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Centene Corp CNC

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Morningstar’s Analysis

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Undervalued Centene Aims to Accelerate Profit Growth, Which Could Boost Shares Further

Julie Utterback, CFA Senior Equity Analyst

Analyst Note

| Julie Utterback, CFA |

After only low-single-digit earnings growth in 2021, we think further value could be unlocked at Centene if it can meet its midteens earnings growth goal for 2021-24. We have similar assumptions baked into our $91 fair value estimate and continue to view the shares as significantly undervalued in a managed-care organization sector that appears about fairly valued on average. As with the other MCOs we cover, we think a narrow economic moat surrounds Centene's top-tier medical insurance position. Unlike its peers, though, Centene focuses primarily on government-sponsored programs and also boasts the leading position on the individual exchanges, which is expected to be the key vehicle for increasing the insured rate in the United States and could provide a near-term catalyst for Centene.

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Company Profile

Business Description

Centene is a managed-care organization focused on government-sponsored healthcare plans, including Medicaid, Medicare, and the individual exchanges. After acquiring WellCare in early 2020, Centene served 22 million medical members as of September 2021, mostly in Medicaid (68% of membership), the individual exchanges (10%), Medicare Advantage (6%), and the balance in Tricare (West region), correctional facility, and international plans. The company also serves 4 million users through the Medicare Part D pharmaceutical program.

7700 Forsyth Boulevard, Centene Plaza
St. Louis, MO, 63105
T +1 314 725-4477
Sector Healthcare
Industry Healthcare Plans
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2020
Stock Type Aggressive Growth
Employees 71,300