Stock price when the opinion was issued
Tanked over 40% today because yesterday they withdrew their full-year forecast due to low sales on ACA (Obamacare) plans. Market growth in 22 states is lower than expected; expects a $1.8 billion reduction in expected risk-adjustment revenue transfers from Washington. Also expects a $2.75 hit to EPS this year. No wonder shares were hammered. Them and these are peers are paying out a lot more than they had expected. A major problem are fraudulent claims in ACA.
CNC provides healthcare to under-insured families and military personnel in the US. Healthcare is a sector expected to grow for years to come as the population ages. It trades at 1.6x book and 17x earnings. Cash reserves are growing as stock is aggressively bought back and debt is retired. We recommend placing a stop-loss at $63, looking to achieve $88 -- upside potential of 20%. Yield 0%
(Analysts’ price target is $88.33)