What Happened?
Shares of health coverage company Centene (NYSE: CNC) fell 10.7% in the afternoon session after the Centers for Medicare & Medicaid Services (CMS) proposed a much lower-than-expected payment rate increase for 2027 Medicare Advantage plans.
The agency outlined a proposal to raise payment rates by a mere 0.09%, which was significantly below the 4% to 6% increase that analysts and the industry had anticipated. This unexpectedly small bump raised concerns about the future profitability for government-sponsored health plan providers. The news triggered a broad sell-off across the health insurance sector, affecting other major insurers as well. The proposal also included potential restrictions on insurers' coding practices, which added to the negative market reaction.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Centene? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Centene’s shares are very volatile and have had 21 moves greater than 5% over the last year. But moves this big are rare even for Centene and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 22 days ago when the stock gained 4.2% on the news that Barclays upgraded the company from "Equal-Weight" to "Overweight" and raised its price target.
The new price target was set at $54.00, up from the previous target of $44.00. The analyst's decision was based on a detailed pricing analysis of the Affordable Care Act (ACA) market. Barclays noted that Centene was well-positioned to improve its ACA margins. This improvement was expected to come from strong premium increases without harming the company's competitive standing in the marketplace.
Centene is down 1.3% since the beginning of the year, and at $41.21 per share, it is trading 37.5% below its 52-week high of $65.89 from January 2025. Investors who bought $1,000 worth of Centene’s shares 5 years ago would now be looking at an investment worth $705.53.
While Wall Street chases Nvidia at all-time highs, an under-the-radar semiconductor supplier is dominating a critical AI component these giants can’t build without. Click here to access our full research report, it’s free.
