U.S. markets close in 6 hours 15 minutes
  • S&P 500

    3,834.79
    +3.40 (+0.09%)
     
  • Dow 30

    31,007.98
    +40.16 (+0.13%)
     
  • Nasdaq

    11,322.69
    +0.45 (+0.00%)
     
  • Russell 2000

    1,741.33
    +13.57 (+0.79%)
     
  • Crude Oil

    98.32
    -1.18 (-1.19%)
     
  • Gold

    1,760.70
    -3.20 (-0.18%)
     
  • Silver

    19.22
    +0.09 (+0.49%)
     
  • EUR/USD

    1.0201
    -0.0069 (-0.67%)
     
  • 10-Yr Bond

    2.7870
    -0.0220 (-0.78%)
     
  • GBP/USD

    1.1939
    -0.0013 (-0.11%)
     
  • USD/JPY

    135.1000
    -0.7420 (-0.55%)
     
  • BTC-USD

    20,095.98
    +668.53 (+3.44%)
     
  • CMC Crypto 200

    435.80
    +0.27 (+0.06%)
     
  • FTSE 100

    7,135.47
    +110.00 (+1.57%)
     
  • Nikkei 225

    26,107.65
    -315.82 (-1.20%)
     

Centene (CNC) Raises 2022 Guidance, Ups Share Buyback Fund

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·3 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Centene Corporation CNC recently provided an improved 2022 guidance. Also, CNC increased its stock repurchase program and authorized a new debt buyback program. The upbeat guidance should instill investors’ confidence in the stock.

Centene’s 2022 adjusted earnings per share (EPS) are projected within $5.55-$5.70, up from the previous outlook of $5.40-$5.55. The midpoint of the altered guidance suggests a 9.2% improvement from the 2021 figure. Further, CNC expects adjusted EPS to rise to $7.50-$7.75 in 2024, implying 48% growth from the 2021 levels.

Premium and service revenues for 2022 are anticipated between $134.3 billion and $136.3 billion, up from the earlier view of $132.3-$134.3 billion. The midpoint of the revised guidance hints at a 14.7% rise from the 2021 figure. Centene's leading position in the industry, supported by its prudent operating performance, might help achieving the set goals.

CNC’s improvement in guidance incorporates higher Medicaid premium revenues and a favorable second-quarter performance. CNC intends to reduce its real-estate footprint to improve efficiency. Early termination of leases, which will reduce its domestic leased space by 65%, might induce pre-tax costs of around $750-$800 million, including impairments. While the costs will likely be recorded during the second and the third quarter, these are not expected to affect CNC’s adjusted EPS.

Rationalization of its real estate is expected to lead to a decline in leased real-estate expenses by $180-$200 million per annum. The latest guidance doesn’t include Magellan Rx and PANTHERx divestment plans. Centene also increased its existing share buyback program by $3 billion. CNC bought back $200 -million worth of stocks in May. Currently, CNC has $3.6 billion remaining under its share buyback program.

Additionally, Centene announced a new $1-billion debt buyback plan. CNC intends to use majority of the proceeds from the Magellan Rx and PANTHERx divestments to repurchase shares and reduce its debt burden. CNC’s long-term debt inched up 0.4% from the 2021-end level to $18.6 billion at the first-quarter 2022 end. Hence, its focus on reducing debt is praiseworthy.

Price Performance

Centene’s shares have increased 5.8% in the past year compared with the industry’s 10.8% rise.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Zacks Rank and Key Picks

Centene currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the medical space are Select Medical Holdings Corporation SEM, Altimmune, Inc. ALT and Progyny, Inc. PGNY, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Select Medical’s earnings is currently pegged at $2.19 per share. SEM has witnessed one upward estimate revision in the past 60 days against none in the opposite direction.

Select Medical’s earnings beat estimates in each of the last four quarters, the average being 42%.

The Zacks Consensus Estimate for Altimmune’s 2022 bottom line indicates an 8.2% improvement from the 2021 levels. ALT has witnessed four upward estimate revisions in the past 60 days against none in the opposite direction.

Altimmune’s earnings beat estimates in three of the last four quarters and missed once.

The Zacks Consensus Estimate for Progyny’s 2022 bottom line has improved 4.5 times in the past 60 days. PGNY has witnessed three upward estimate revisions during the same time period against none in the opposite direction.

Progyny’s earnings beat estimates in each of the last four quarters, the average being 169.7%.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research