Here's a comprehensive analysis involving CNC using both FA and TA.
FA Picture and Background
Centene Corp. is a healthcare enterprise, which engages in the provision of programs and services to government sponsored healthcare programs. It operates through the following segments: Medicaid, Medicare, Commercial, and Other. The Medicaid segment includes the Temporary Assistance for Needy Families program, Medicaid Expansion programs, the Aged, Blind or Disabled program, the Children's Health Insurance Program, Long-Term Services and Supports, Foster Care, Medicare-Medicaid Plans, which cover beneficiaries who are dually eligible for Medicaid and Medicare, and other state-based programs. The Medicare segment consists of Medicare Advantage, Medicare Supplement, Dual Eligible Special Needs Plans, and Medicare Prescription Drug Plans. The Commercial segment is involved in the Health Insurance Marketplace product along with individual, small group, and large group commercial health insurance products. The Other segment refers to pharmacy operations, Envolve Benefit Options’ vision and dental services, clinical healthcare, behavioral health, the TRICARE program, and corporate management companies. The company was founded in 1984 and is headquartered in St. Louis, MO.
On July 1, 2025,
Centene suddenly withdrew its full-year guidance and admitted it had overestimated its revenue by $1.8 billion due to a miscalculation in its marketplace risk adjustment. The hit affected 72% of its ACA membership. Following this announcement, the stock plunged by 40%.
On July 2nd
Shares of health coverage company Centene  CNCfell 39.4% in the afternoon session after the company unexpectedly withdrew its full-year 2025 financial guidance, citing significantly higher-than-anticipated costs in its insurance marketplace and Medicaid businesses.
The healthcare giant shocked investors by announcing that preliminary data showed a much higher rate of members making claims than was built into its financial assumptions.
Specifically, Centene anticipates a $1.8 billion reduction in expected revenue from its Affordable Care Act (ACA) marketplace plans, which translates to a hit of approximately $2.75 to its adjusted earnings per share. The company had previously forecast adjusted earnings of over $7.25 per share for the year.
Adding to the pressure, Centene also experienced rising medical cost trends in its Medicaid business, particularly for behavioral health, home health, and high-cost drugs in key states like New York and Florida. The combination of lower revenue and higher costs forced the company to pull its forecast, creating significant uncertainty. Following the news, several Wall Street analysts downgraded the stock and cut their price targets, including UBS and JP Morgan.
On July 25
Centene says an analysis of data from an independent actuarial firm confirmed a significant shift in the marketplace risk pool in 2025, which it sees being primarily driven by three things. CEO Sarah London on a 2Q earnings call notes that a higher-than-expected percentage of healthy and/or low-utilizing members left the marketplace during open enrollment. Additionally, new signups to the market had higher morbidity, likely reflecting changes in the underlying member mix, London adds. Lastly, a step up in marketplace utilization more broadly, combined with more aggressive provider coding, is likely driving higher-in-the-year documented morbidity, the CEO concludes. The managed-care specialist now expects 2025 earnings to be pressured by $2.4 billion, up from an earlier estimate of $1.8 billion. (denny.jacob@wsj.com; @pennedbyden)
TA Picture
First of all, it drifted and remained below the green rail for a while and none of the indicators said it will be going up real soon now.
Always respect the green rail. It is your floor and when you drift below it, the ground may give way, as it did here and you will be sorry.
Secondly, its rarely a good idea to catch a falling knife. Again, the green rail is your floor. Wait for it bounce off of that floor before you pick it up. I've manually placed a vertical bar where the system gave a buy signal and where I bought it.
Thirdly, the red rail is your ceiling as you approach it from below. You should expect a pause and often a reversal when you reach it. And you see that happening here, but the red rail slided under the price, providing it with a floor. If you look at the two lower indicators, you see how they beautifully telegraph this move.
Finally, we are now approaching another watchpoint. The stock is just about where it gapped down ~3 months ago, it is approaching the blue rail (which is your midpoint), and we have finished the quarter so we should the company will be tallying up their P&L and someone will know before it is released to the public.
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My take
So the company has fewer customers. The healthier ones are leaving and the sicker ones are joining/staying and on top that the government is putting pressure on them. This is a triple whammy nightmare for any insurance company. If you take the extreme view, Trump's "beautiful" bill can leave half of the Medicare people without insurance.
On the positive side, they are the leader in their field and have a lot of subscribers. They are still making a fair amount of money and are financially secure. And Trump's emphasis on streamlining the billing and standardization can be actually a boon for CNC.
So the story becomes one of execution. If the company can execute well, they will rise stronger than before. If not, make sure your stoploss protects you.
Here's a quote from JPM analyst. I fundamentally agree with it.
** Maintains "neutral" stance on both CNC and MOH
** JPM says CNC remains an execution story, with much of the focus on whether it can meet its second-half 2025 expectations and recover margins in 2026 from Affordable Care Act
** Shares of managed healthcare cos are marginally down in premarket trading
** Brokerage sees risk and reward for MOH in 2025 as balanced, due to policy uncertainty and possible challenges in ACA exchanges in 2026
** "CNC has a leading market share in Medicaid, where we expect managed care penetration to continue to increase over time as states transition higher acuity, higher revenue populations to managed care"- JPM
** J.P.Morgan cuts PT on Centene Corp CNC to $30 from $48 and Molina Healthcare Inc  MOH to $184 from $272
I've manually placed a vertical bar where the system was all green and gave a go signal. That price was ~27.30. If you were really keen on the stock, you could have made a case to buy it at the amber marker (on August 8th) where my stochastic and RSI both gave a positive signal just above the midline. That price would have been $26. Incidentally, on August 8th the CEO bought ~20k shares, putting half million dollars of her own skin in the game. Her average price was 25.5. So between the amber and green lines were your accumulation zone.
Personally I don't seen much of a difference than waiting for the fully signal, but a case could be made that at that point CNC was a value stock and worth fighting the tape for (aka. averaging down).
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