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Shares of Centene Corporation (NYSE: CNC) have climbed 6.2% from their November 10 low of $34.25. Today, shares closed at $36.38.
The move coincides with sustained bullish sentiment from retail traders on Reddit, particularly on r/wallstreetbets, where discussion activity spiked dramatically during the recent pullback in shares. Sentiment scores have held steady in the 65-72 range throughout the past month. With 50/100 being neutral, this puts Centene sentiment firmly in bullish territory.
Why the retail enthusiasm? It’s all rooted in a classic contrarian play. Wall Street analysts remain cautious, with 14 of 20 maintaining “Hold” ratings. But retail traders see opportunity
in the valuation disconnect. The company trades at just 0.106 times sales and 0.849 times book value, metrics that suggest deep value territory despite current profitability challenges.
November 10 marked a critical inflection point, when the stock dropped 8.8% on heavy volume of 17.7 million shares. That same day, Reddit activity reached its highest levels of the month, with posts on r/wallstreetbets garnering 563 upvotes and 115 comments in a single snapshot. The pattern is clear: retail traders bought the dip while institutions remained on the sidelines.
The Value Trap Debate Intensifies
Reddit discussions reveal a community convinced that Wall Street is missing the story. One particularly active thread on r/wallstreetbets captured the sentiment:
“CNC – The most undervalued stock in healthcare?” – u/ValueHunter2025 on r/wallstreetbets
The bullish case rests on several concrete factors that retail traders find compelling:
- Extreme valuation compression: At $17.74 billion market cap on $167.68 billion in trailing revenue, Centene trades at a price-to-sales ratio of 0.106, among the lowest in the managed care sector
- Recent operational momentum: The Q3 earnings beat followed a catastrophic Q2 miss of -525%, suggesting the company’s worst operational challenges may be resolving faster than analysts expected
- Insider conviction: CEO Sarah London acquired 19,230 shares at $25.50 in August 2025, near the 52-week low, demonstrating leadership confidence at a critical moment
- Revenue growth acceleration: Premium and service revenues grew 22% year-over-year, with Medicare segment revenue surging 66%
The counterargument from professional analysts centers on profitability concerns that retail traders appear willing to overlook. Centene reported a GAAP EPS of -$10.67 for the trailing twelve months, driven by a $6.7 billion goodwill impairment charge in Q3. The company’s return on equity stands at -21.9%, and its health benefits ratio climbed to 92.7% from 89.2% the prior year, indicating rising medical costs that pressure margins. These metrics explain why the majority of analysts maintain “Hold” ratings despite the attractive valuation multiples.
What Comes Next For Centene?
The forward outlook hinges on whether Centene can sustain the operational improvements that drove its Q3 beat. Management raised full-year adjusted EPS guidance to at least $2.00, up $0.25 from prior expectations. The company’s SG&A ratio improved to 7.0% from 8.3%, demonstrating better cost control. However, the elevated health benefits ratio of 92.7% remains a concern, particularly in an environment where medical utilization continues normalizing post-pandemic. Retail traders betting on continued momentum should monitor monthly enrollment trends in the Medicare Advantage segment (where 66% revenue growth drove much of Q3’s outperformance) and watch for any signs that the improved HBR is sustainable rather than temporary.