Centene Corporation (CNC): A Bull Case Theory

We came across a bullish thesis on Centene Corporation on Value investing subreddit by PleasantAnomaly. In this article, we will summarize the bulls’ thesis on CNC. Centene Corporation’s share was trading at $28.84 as of August 27^th. CNC’s trailing and forward P/E were 7.00 and 14.56 respectively according to Yahoo Finance.

Centene Corporation (CNC) has emerged as a compelling opportunity in the healthcare sector, particularly for investors seeking to rotate out of richly valued technology names. Healthcare has historically outperformed the S&P 500, and CNC, despite recent turbulence, offers a favorable risk/reward profile. The stock has been under pressure after management raised its Medical Loss Ratio outlook due to higher claims costs and pulled 2025 guidance, revising EPS expectations down sharply to $1.75 from a prior $7.50.

With Q1 EPS at $2.90 and Q2 at -$0.16, consensus is effectively pricing in a $1 loss for the remainder of the year, setting an unusually low bar. Even modest operational improvements or clearer messaging from leadership could re-rate shares into the $40–50 range. Management has already refiled rates across 29 states, with decisions due in September that reflect higher costs from behavioral health services, expensive drugs like Ozempic and Wegovy, and home health. Unlike UnitedHealth (UNH), CNC benefits from a cleaner reputation, no DOJ scrutiny, and a competitive health plan with Ambetter, which has significantly lower claim denial rates.

The CEO is focused on restoring profitability through targeted cost controls, higher premiums, and potential share repurchases. Key risks include prolonged elevated morbidity and utilization, political pressure from bills such as OBBBA, and higher member costs, but these risks are likely overstated as industrywide rate increases mitigate switching and long-term impacts remain distant. With resilient fundamentals, improving pricing power, and an undervalued stock, CNC and the broader healthcare sector present timely opportunities for value investors.

Previously we covered a bullish thesis on Oscar Health, Inc. (OSCR) by convexititties in March 2025, which highlighted its discounted valuation, insider buying, and AI-driven technology stack. The company’s stock price has appreciated approximately by 10.44% since our coverage. This is because ACA fears eased while growth remained intact. PleasantAnomaly shares a similar view on healthcare but emphasizes Centene’s rerating potential through rate filings and profitability restoration.

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Disclosure: None.