Centene (CNC): Is This Healthcare Stock About To Explode?
Centene Corporation (CNC): Bullish Signals Emerge
Recent activity surrounding Centene Corporation (CNC) suggests a potential turnaround for this major player in managed care. While the company has faced headwinds, including surging costs, higher utilization, and fraud allegations, several factors point towards a possible bullish future.
A recent analysis on Waterboy’s Substack highlighted a bullish thesis on Centene. As of July 17th, 2025, Centene's share price was trading at $29.14, with trailing and forward P/E ratios of 4.30 and 9.13 respectively, according to Yahoo Finance.
The company's stock experienced a significant drop following President Trump's One Big Beautiful Bill Act (OBBBA), which aims to cut Medicaid spending. This legislation poses a challenge to Centene, given its heavy reliance on Medicaid. However, the balance sheet appears strong enough to absorb the initial hit, and premiums are likely to adjust accordingly.
Founded in 1984 and expanded through acquisitions, Centene now serves 25.8 million members and generated $158.1 billion in premiums in 2024, primarily from Medicaid. Despite relatively thin net profit margins around 2%, the company's profitability is supported by $19.7 billion in investments earning 5.2% and a capital-light model that delivered a 14.2% ROE last year.
With a five-year average free cash flow of $4 billion, the company's EV/FCF multiple stands at a mere 4.7x. Management also retains $2.23 billion under its $10 billion buyback program, potentially capable of retiring nearly 15% of shares at depressed valuations.
Centene's Trading Volume Surges
Adding to the positive outlook, Centene's trading volume surged by 44.22% on July 23, 2025, reaching 7.67 billion. This placed it 146th in the day's stock market rankings. The stock has also seen a 5.49% increase today, marking the second consecutive day of gains, and a total increase of 7.25% over the past two days.
This increased volume suggests growing investor interest and confidence in the company's potential.
Strategic Partnerships and Technological Investments
Centene has also announced a strategic partnership with a prominent healthcare provider, aiming to enhance service offerings and expand market reach. The company is also investing in cutting-edge technology, focusing on data analytics and artificial intelligence to improve operational efficiency and customer experience.
These initiatives demonstrate Centene's commitment to innovation and long-term growth.
Conclusion
While regulatory uncertainty remains, the recent surge in trading volume, strategic partnerships, and technological investments suggest that much of the downside risk may already be priced into Centene's stock. Keep an eye on CNC as it navigates the evolving healthcare landscape.