Stocks ticked slightly higher this morning, looking to build on modest gains from the past few sessions. Many investors seem to be struggling to trust recent gains as recession concerns continue to loom on Wall Street and are seeking companies from defensive sectors that have a reputation for being resilient during times of economic weakness.
Companies that operate in industries like health care, utilities, and consumer staples are known to hold up well during economic downturns because their offerings are needed in all phases of the business cycle. But not all stocks from the main defensive sectors are a buy right now. Today we’re highlighting a leader from a defensive industry that’s currently gaining steam in a market being rocked by recession fears.
Multi-national healthcare and managed care provider Centene Corporation (CNC) has been a beneficiary of the latest uptick in healthcare and seems ready to build on that strength amid a market being rocked by fears of recession.
Over the past four quarters, earnings increased an average of 21%, and revenue increased an average of 15%. Centene beat first-quarter predictions, with revenue rising 24% year over year. Analysts predict that CNC earnings per share will increase by 8% in 2022. Profits are seen ramping up, with 9% growth seen this year and growth of 13% expected in 2023.
Centene recently increased its 2022 full-year guidance, citing increased Medicaid premium revenue and “favorable” performance so far in the second quarter. For 2022, the company increased its Premium and Service Revenues guidance range by $2.0 billion to a new range of $134.3 billion to $136.3 billion and has increased its Adjusted Diluted EPS guidance range by $0.15 to a new range of $5.55 to $5.70.
Funds and other institutional investors are key backers of the stock, with 67% of shares currently held by big money. As of March, 2,269 funds owned CNC shares, an increase of 124 since December, according to MarketSmith.
As the leader in managed care, Centene provides high-quality, affordable products to nearly 1 in 15 Individuals across the nation, mainly through government-sponsored healthcare programs. The $100-billion plus enterprise ranked No. 24 on the 2021 Fortune 500. The pros covering CNC give it a solid Buy rating and a median price target of 96%, representing a 12% increase from Thursday’s opening price.
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