Shares of Centene (CNC) plunged 40% on Wednesday after the healthcare insurer unexpectedly pulled its 2025 guidance. The surprise move has raised concerns about the company’s near-term outlook and led to a couple of analysts downgrading CNC stock’s rating.
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The impact of the guidance pull was seen among other health insurer stocks. UnitedHealth (UNH) stock was down 5%. Also, shares of Elevance (ELV) and Humana (HUM) declined by 10.36% and 3.5%, respectively.
Here’s Why the Outlook Was Pulled
The withdrawal came after new data revealed that growth in the Affordable Care Act (ACA) plans is slower and that the health of the insured population is worse than previously expected. This led to a projected $1.8 billion shortfall in risk adjustment revenue, slashing expected earnings by $2.75 per share.
Further, rising Medicaid costs led the company to reassess its pricing strategy for 2026 and pull its near-term outlook.
What’s Behind the Downgrade?
Two Wall Street analysts, A.J. Rice from UBS and John Stansel from JPMorgan, slashed their ratings on Centene stock to Hold from Buy.
The UBS analyst also cut his price target to $45 from $80, and lowered his 2025 and 2026 EPS estimates by over 50% and 45%, respectively. The downgrade stems from unexpected risk adjustment headwinds and high Medicaid cost trends, which the firm believes will weigh on Centene’s near-term earnings.
Similarly, Stansel reduced his price target to $48 from $75. He cited several uncertainties in Centene’s recovery, including changes to premium tax credits and new federal rules for the ACA market.
Is Centene Stock a Good Buy?
Turning to Wall Street, CNC stock has a Moderate Buy consensus rating based on seven Buys and seven Holds assigned in the last three months. The average Centene share price target is $67.42, which implies a potential upside of 97.89% from current levels.
