Centene Corporation (CNC): A Bull Case Theory 

We came across a bullish thesis on Centene Corporation on Value investing subreddit by Lanky_Positive8943. In this article, we will summarize the bulls’ thesis on CNC. Centene Corporation’s share was trading at $36.82 as of October 2nd. CNC’s trailing and forward P/E were 8.94 and 10.37 respectively according to Yahoo Finance.

Centene Corporation (CNC) recently saw its share price fall to a decade-low near $25, down from prior levels in the $50–$70 range, primarily due to an unusually “sicker” ACA pool this year, which drove higher usage and resulted in a $2.4 billion loss. The company took the full P&L hit in the most recent quarter, revising 2025 EPS guidance down to $1.75 from the prior $7.25 projection.

Despite this near-term weakness, the investment case hinges on 2026, when ACA rate increases are expected to drive a significant earnings rebound. Early state approvals indicate average price hikes of approximately 27% for Centene’s ACA business, suggesting a substantial recovery in ACA margins and revenues.

Based on current data, the author estimates 2026 EPS at a minimum of $5.80, even assuming no extension of ACA subsidies, with a potential rise to around $6.00 if subsidy extensions reduce pool severity. This projection incorporates ACA premium growth, normalized Medicaid HBR trends, and contributions from Medicare and other businesses. The company’s next earnings call in mid-October will likely provide clearer visibility on approved rates, September enrollment data, and floor EPS guidance for 2026, which could reinforce investor confidence.

The combination of an undervalued share price, substantial upside from ACA rate increases, and normalized utilization trends presents a compelling opportunity for investors. The author expects shares to potentially double, returning to the $52–$63 range between the October earnings call and Q1 2026 results, as the market recognizes the earnings recovery. With the stock trading near historical lows, Centene offers a high-reward setup with limited downside, underpinned by strong visibility into rate approvals and operational normalization.

Previously we covered a bullish thesis on Molina Healthcare, Inc. (MOH) by Long-Term Pick in February 2025, which highlighted growth from new Medicaid and Medicare contracts and strong Marketplace performance. The company’s stock price has depreciated approximately by 27.12% since our coverage due to short-term operational pressures. The thesis still stands, while Lanky_Positive8943 emphasizes Centene’s ACA challenges and potential EPS rebound.

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Disclosure: None.