Why Should You Hold Centene (CNC) in Your Portfolio Now?

Centene Corporation
CNC has been in
investors' good books owing to its prudent operating performance,
strong inorganic growth and solid fundamentals. A solid guidance is
another highlight of the stock.

The stock carries a
VGM
Score of A. Here V stands for Value, G for Growth and M for
Momentum with the score being a weighted combination of all the
three factors.

Year to date, shares of the health insurer have gained 1.6%,
underperforming its

industry's growth of 31.2%. However, given its solid
fundamentals, it is expected to bounce back going forward.

Image
Source: Zacks Investment Research

Other companies in the same space,
such as
The Joint Corp.
JYNT,
Anthem Inc.
ANTM and
Molina Healthcare, Inc.
MOH have also
rallied 296.8%, 15.2% and 23.2% in the same time frame.

The second quarter witnessed better revenues, led by the
recent PANTHERx buyout, membership growth in the Medicare business
and the continuing suspension of Medicaid eligibility
redeterminations.

Concurrent with June-quarter results, the presently Zacks
Rank #3 (Hold) company revised its full-year outlook. You can see


the complete list of today's Zacks #1 Rank (Strong Buy) stocks
here.

For the current year, management anticipates revenues in the
$123.3-$125.3 billion range, up from the previous projection of
$120.1-$122.1 billion. For 2021, the company's adjusted EPS is
still expected to be $5.05-$5.35, up from the past guidance of
$5-$5.30.

The leading health insurer has been witnessing solid revenue
growth since 2002. In the first six months, its top line increased
13.8% year over year owing to the PANTHERx buyout, Medicaid
membership growth and a strong membership rise in the Medicare
business.

Centene's inorganic growth story also impresses. In December
2020, it acquired PANTHERx, one of the largest and the
fastest-growing specialty pharmacies in the United States. This
buyout solidifies its foothold in the booming specialty drug
market.

The leading insurer also entered into an agreement to buy
Magellan Health that will strengthen its position in the market and
enable it to establish a behavioral health platform. Given the
current demand uptrend for behavioural health, this is the right
time for such a strategic move. The company also completed the
buyout of the remainder of Circle Health.

This clearly shows the company's constant efforts in
strengthening its international portfolio.

On the back of several contract wins, medical membership of
the company is steadily rising. In 2020 and during the first half
of 2021, the same rose 67% and 3% year over year, respectively. As
of Jun 30, 2021, managed care membership came in at 25.1 million,
up 3% year over year.

Last month, Buckeye Health Plan, the company's Ohio unit,
received a Medicaid contract from the Ohio Department of Medicaid.
Its Nevada subsidiary SilverSummit Healthplan also won a contract
from the Nevada Department of Health and Human Services -- Health
Care Financing and Policy.

With several contracts in the pipeline, we expect this trend
to continue.

However, the company's Marketplace business has been
suffering for quite some time now. Membership in the Health
Insurance marketplace declined 9.1% year over year in the first six
months of 2021.

The company's 2021 earnings estimate indicates an upside of
2.8% from the prior-year reported figure.

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Molina Healthcare, Inc (MOH): Free Stock Analysis Report

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The Joint Corp. (JYNT): Free Stock Analysis Report

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