Will This Downgrade Hurt Centene (CNC) Stock Today?

NEW YORK (TheStreet) -- Centene (CNC) stock has been downgraded to "sell," Citigroup said Tuesday. The firm said the revision was because takeover rumors will likely fizzle out. 

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Separately, TheStreet Ratings team rates CENTENE CORP as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate CENTENE CORP (CNC) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 16.8%. Since the same quarter one year prior, revenues rose by 37.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 39.02% and other important driving factors, this stock has surged by 44.80% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, CNC should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • CENTENE CORP has improved earnings per share by 39.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, CENTENE CORP increased its bottom line by earning $2.85 versus $0.01 in the prior year. This year, the market expects an improvement in earnings ($3.71 versus $2.85).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Health Care Providers & Services industry average. The net income increased by 43.4% when compared to the same quarter one year prior, rising from $23.00 million to $32.98 million.
  • Net operating cash flow has significantly increased by 487.17% to $252.45 million when compared to the same quarter last year. In addition, CENTENE CORP has also vastly surpassed the industry average cash flow growth rate of 37.05%.
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