CNC shares are nearing their average analyst price target
Centene Corp (NYSE:CNC) came within pennies of a new all-time high earlier, topping out at exactly $136, following a bull note out of Barclays. An analyst there began coverage with an "overweight" rating and $158 price target, expecting the insurance name to maintain its strong Medicaid market share over the next three years. This target represents more than 16% upside from CNC's current price of $135.91, and it's deep into record-high territory.
Coming into 2018, CNC stock looked like a name that could take off, and it hasn't disappointed, now up more than 34% year-to-date -- delivering profits to subscribers along the way. And data from Schaeffer's Senior Quantitative Analyst Rocky White says it still could be a good time to buy calls on Centene, since it has a low Schaeffer's Volatility Index (SVI) -- 24.7%, in the 11th annual percentile -- and is trading near a 52-week high. There have been five other times since 2008 when the equity was sporting a similar combo of low volatility expectations and technical outperformance, and it averaged a one-month gain of 3% after those signals.
What makes this setup even more interesting is the fact that the company will be reporting second-quarter earnings before the open tomorrow. Looking back at its earnings history, the stock has moved lower the day after earnings in three of the past four quarters, including a 2.6% decline in April, and a 1.6% drop last July.
On the one hand, analysts seem very bullish on CNC, with 10 of 14 in coverage saying to buy. Still, the stock's average 12-month price target of $140.32 isn't pricing in much upside, so if Centene does impress with earnings there's at least potential for price-target hikes from analysts.