CNC - Embedded Expectations Analysis - 2021 06 09
Centene Corporation (CNC:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with a 12.6x Uniform P/E. At these levels, the market is pricing in bearish expectations for the firm, but management is confident about their revenue growth drivers, Medicare Stars margin expansion, and macro tailwindsSpecifically, management is confident the new business win in Oklahoma will drive revenue growth, that they increased their estimate of the state rate and risk-sharing mechanism revenue impact to $550 million, and that the business will experience macro tailwinds for the rest of 2021. In addition, they are confident the Medicare Stars program provides room for margin expansion, nothing unusual is happening with prior year claims development, and their Marketplace business has not seen a change in acuity levels
Centene is an insurance holding company. The company's Managed Care segment provides health plan coverage to individuals through government subsidized programs. The company also provides a variety of individual, small group, and large group commercial healthcare products, both to employers and directly to members in the Managed Care segment. The company's Specialty Services segment consists of the company's specialty companies prviding healthcare services and products to state programs, correctional facilities, healthcare organizations, employer groups and other commercial organizations, as well as to its own subsidiaries. The Specialty Service segment also includes the Government Contracts business.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.