Top 10 Health Insurance Stocks To Buy

6. Centene Corporation (NYSE:CNC)

Number of Hedge Fund Holders: 72

Centene Corporation (NYSE:CNC), based in St. Louis, Missouri, is a managed care company that acts as a middleman for government-sponsored and privately insured healthcare programs, primarily in the Medicaid market.

Cantor Fitzgerald reiterated its Overweight rating and $90 price target on Centene Corporation (NYSE:CNC) shares. Sarah James, the firm’s analyst, presented insights into Centene’s earnings per share and revenue risk from Medicaid expansion and states with trigger legislation. Centene reported an EPS of $0.13 on revenue of $17.8 billion, with high exposure to states that have implemented trigger legislation. The company’s total revenue in the past year were $147.29 billion, with a 14.65% gross profit margin.

Looking ahead, Centene Corporation (NYSE:CNC) has provided forecasts for 2025, with an estimated premium and service revenue between $158 billion and $160 billion, alongside an adjusted diluted EPS of more than $7.25.

Greenlight Capital stated the following regarding Centene Corporation (NYSE:CNC) in its Q4 2024 investor letter:

“We established a new medium-sized position in CNH Industrial (CNH) and a small position in Centene Corporation (NYSE:CNC). CNC is the largest Managed Medicaid company. Shares are trading at a historically low valuation despite the company currently significantly underearning in its Medicaid book. This valuation disconnect is driven by concerns about the impact of a likely non-extension of enhanced ACA exchange subsidies beyond 2025 on CNC’s exchange business, as well as potential attempts by the incoming Trump administration to make adverse changes to the Medicaid program. We think a repricing in the core Medicaid business over the next two years could more than offset some of these potential headwinds, which are not guaranteed to materialize. We acquired our shares at an average price of $60.54, or about 9x current earnings. Management and the board are taking advantage of the situation by sharply ramping up share repurchases, as well as making large personal stock purchases. CNC ended the year at $60.58.”