Molina Healthcare Shares Drop 27%: Understanding the Pessimistic Earnings Forecast.
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 3d ago
0mins
Should l Buy CNC?
Source: Barron's
- Stock Performance: Molina Healthcare's stock experienced a significant decline before the market opened on Friday.
- Earnings Outlook: The drop was attributed to the company's disappointing earnings forecast for the year 2026.
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Analyst Views on CNC
Wall Street analysts forecast CNC stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for CNC is 43.07 USD with a low forecast of 32.00 USD and a high forecast of 59.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
15 Analyst Rating
5 Buy
8 Hold
2 Sell
Hold
Current: 39.920
Low
32.00
Averages
43.07
High
59.00
Current: 39.920
Low
32.00
Averages
43.07
High
59.00
About CNC
Centene Corporation is a healthcare company. The Company provides fully integrated services to government-sponsored and commercial healthcare programs, focusing on under-insured and uninsured individuals. Its segments include Medicaid, Medicare, Commercial and Other. Specifically, the Medicaid segment includes the Temporary Assistance for Needy Families (TANF) program, Medicaid Expansion programs, the Aged, Blind or Disabled (ABD) program, the Children's Health Insurance Program (CHIP), Long-Term Services and Supports (LTSS), Foster Care, Medicare-Medicaid Plans (MMP), which cover beneficiaries who are dually eligible for Medicaid and Medicare and other state-based programs. The Medicare segment includes Medicare Advantage, Medicare Supplement, Dual Eligible Special Needs Plans and Medicare Prescription Drug Plans. The Commercial segment includes the Health Insurance Marketplace product along with individual, small group, and large group commercial health insurance products.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Sales Surge: The company's revenue soared from $40.81 billion to $49.73 billion, exceeding the consensus estimate of $48.39 billion, reflecting strong demand in the healthcare insurance market and successful business expansion.
- Health Benefits Ratio Shift: The health benefits ratio (HBR) increased to 94.3%, up from 89.6% last year, primarily driven by higher morbidity in the Marketplace and changes due to the Inflation Reduction Act, highlighting rising medical costs.
- Membership Decline: Total membership across Centene's portfolio fell from 28.60 million to 27.63 million, largely due to a drop in Medicaid membership to 12.52 million, despite an increase in commercial membership from 4.81 million to 5.99 million, indicating shifts in market dynamics.
See More
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- Honoring Healthcare Heroes: At the WellSpace Health Alhambra Community Health Center, Health Net and WellSpace Health recognized the vital work of medical professionals serving vulnerable communities, emphasizing the importance of community support and aiming to enhance public awareness and respect for healthcare services.
- Youth Empowerment Event: The 'Strong Youth, Strong Communities' event at River City High School engaged over 2,000 students with motivational talks from Pro Football Hall of Fame legends, aimed at enhancing students' leadership skills and mental health awareness, thereby promoting overall community well-being.
- Community Collaboration: This event not only showcased Health Net and Pro Football Hall of Fame's commitment to the community but also strengthened youth focus on life skills and mental health through collaboration with Big Brothers Big Sisters, fostering unity and support within the community.
- Long-term Commitment: Health Net and Centene Corporation's ongoing dedication to meeting the healthcare needs of military personnel and their families is further solidified through these events, showcasing a positive corporate social responsibility image and reinforcing their influence and accountability in the community.
See More
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- Dow Hits Record High: The Dow Jones Industrial Average surged 2.47% to reach an all-time high, reflecting market optimism about economic recovery, particularly amid strong rebounds in tech and chipmaker stocks.
- Consumer Confidence Rises: The University of Michigan's consumer sentiment index unexpectedly increased to 57.3, surpassing expectations of 55.0, indicating enhanced consumer confidence that could drive future spending.
- Bitcoin Rebounds: Bitcoin surged over 11% from a 1.25-year low, lifting cryptocurrency-exposed stocks and signaling renewed investor interest and confidence in crypto assets.
- Strong Corporate Earnings: Over 79% of S&P 500 companies exceeded earnings expectations, with S&P earnings growth projected at 8.4% for Q4, providing robust support for the market and indicating ongoing improvement in corporate profitability.
See More
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- Market Performance: The S&P 500 Index rose by 1.10%, and the Dow Jones Industrial Average increased by 1.60%, reaching an all-time high, reflecting positive market sentiment driven by strong tech earnings results.
- Tech Stock Recovery: Gen Digital and Roblox surged over 7% and 9%, respectively, after forecasting full-year adjusted EPS and bookings above consensus, indicating a robust recovery in the tech sector that may attract more investment.
- Consumer Confidence Boost: The University of Michigan's consumer sentiment index unexpectedly rose to 57.3, a six-month high, surpassing expectations of 55.0, reflecting optimistic consumer sentiment about the economic outlook, which supports further market gains.
- Inflation Expectations Shift: While short-term inflation expectations fell, long-term expectations ticked up slightly, indicating market concerns regarding the Fed's monetary policy, which could influence future investment decisions and market volatility.
See More
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- Tech Stock Rebound: The S&P 500 rose by 1.20% and the Dow Jones Industrial Average surged by 1.48%, reaching an all-time high, driven by better-than-expected tech earnings that boosted investor confidence in the sector's recovery.
- Bitcoin Recovery: Bitcoin rebounded over 7% from a 1.25-year low, lifting cryptocurrency-exposed stocks and alleviating concerns about liquidity in the crypto market, indicating renewed investor interest in digital assets.
- Amazon Investment Concerns: Amazon's announcement of a $200 billion investment in data centers, chips, and other equipment led to a more than 9% drop in its stock, raising doubts about the long-term returns of its AI investments and potentially impacting future investor confidence.
- Earnings Season Insights: With 79% of S&P 500 companies exceeding expectations and Q4 earnings projected to grow by 8.4%, this indicates strong corporate profitability, which may provide ongoing support for the market despite economic uncertainties.
See More
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- Financial Performance Overview: Centene reported a Q4 2025 adjusted diluted loss per share of $1.19 and a full-year adjusted EPS of $2.08, indicating slight outperformance against expectations despite challenges, showcasing management's execution capabilities and market adaptability.
- Optimistic 2026 Outlook: The company projects full-year 2026 adjusted EPS to exceed $3, representing over 40% year-over-year growth, marking a significant recovery in the enterprise's earnings power, particularly in Medicaid and Marketplace stability.
- Cost Control Strategies: Centene employs a multipronged, data-driven approach to manage Medicaid costs, including network optimization and clinical program enhancements, aimed at improving service quality and reducing operational costs, thereby enhancing overall profitability.
- Market Dynamics and Challenges: While Marketplace trends were slightly better than expected, increased accruals related to CMS reconciliation and NSA disputes necessitate aggressive actions to protect the system from fraudulent activities, ensuring future profitability.
See More
