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.
We reiterate CNC, a provider of healthcare to under-insured families and military personnel in the US as a TOP PICK. It continues to build cash reserves, while retiring debt and buying back shares. It trades at 16x earnings, under 2x book and supports a 10% ROE. We recommend trailing up the stop (from $63) to $72, looking to achieve $90 — upside potential of 16%. Yield 0%
(Analysts’ price target is $89.64)