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Centene is one of the largest managed care providers in the US, serving over 12 million people in 14 states.
In addition to being the largest Medicaid Managed Care Organization in the country, Centene is also the largest carrier on the Health Insurance Marketplace and a national leader in managed long-term services and supports.
Centene delivered another strong quarter and outlook on February 6 and analysts responded by raising 2018 full-year earnings estimates 21% from $5.86 to $7.09. The 2019 consensus also vaulted 23% from $6.63 to $8.17.
And this followed the solid company news just a few months ago. Here's what I wrote on December 19...
The company held its annual Investor Day on December 15 and several analysts came away increasingly bullish on the stock. Here's was the word from investment bank Piper Jaffray where their price target on CNC was boosted from $112 to $134...
Piper Jaffray analyst Sarah James raised her price target for Centene to $134 saying the company's investor day "did not disappoint with a material guidance boost." Despite rallying 68% year-to-date, Centene is still the best buying opportunity in the group with potential for earnings upside and multiple expansion "once the market moves past the worst case scenario on reform," James told investors in a research note.
James also sees large scale reform as unlikely and the impact of block grants, which she views as likely, as being a "significant positive" for Centene and managed Medicaid.
Guidance Raised Again on Anticipated Deal Closing
At the December event, Centene provided a 2018 outlook with adjusted EPS of $5.47 to $5.87, vs a Wall Street consensus $5.50 to $5.55. The company saw 2018 revenue of $60.0 to $60.8 billion, vs the consensus of $54.95 billion.
Management also provided an update on their recent proposed $3.75 billion acquisition of Fidelis Care which would give the company significant new exposure to the New York market. Since the deal had not yet closed, analysts had to speculate on the impact of new revenues and synergies.
More than three months later, the deal has still not closed. But it looks like the company update in February solidified those expanded views of new revenues and synergies and firmer estimate revisions have finally started to roll in anyway on high confidence the deal does get done. More details below.
QIWI plc is a $700 million provider of next generation payment services primarily in Russia. The company has an integrated network that facilitates payment services across physical, online and mobile channels.
The QIWI network enables merchants to accept cash and electronic payments from virtual wallets, and operates cash-collecting terminals and kiosks. QIWI plc is based in Moscow and went public in 2013.
I last wrote about QIWI as the Bear of the Day in August when shares were trading $17.50. After that, the stock slid to new 10-month lows under $14 by December.
The reason that QIWI is in the cellar of the Zacks Rank again is that earnings estimates recently took a big hit. In the past 30 days, the full-year 2018 EPS consensus dropped 12% from $1.20 to $1.08, representing -6% growth.
But 2019 profit projections were slashed by 29% from $2.17 to $1.54. While this figure still represents over 42% growth, it may be also be a mirage if history is any guide.
To tell the tale of a "serial earnings decliner" with a picture, here's the Zacks proprietary Price & Consensus chart which plots the stock price against changes in annual EPS projections...
The pattern is clear of optimistic analyst estimates a year or so out that inevitably get drastically cut.
What the company has going for it is a strong recovery in sales growth, with a 14% advance to $260 million expected again this year.
And while next year's revenue forecast of $305 million would be 17% growth, investors should wait and watch for the EPS estimates to make a solid turn before investing in QIWI.
The Zacks Rank will let you know.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
After a Decade-Plus of Insane Growth, Is Apple’s Revenue Finally Plateauing?
Apple’s outsized growth since the iPhone launched has seen it become the world’s most valuable company, worth more than Amazon, Alphabet, and all the other tech giants. But nothing last forever, so let’s take a look at just how much Apple has grown since then, and see if these days are numbered.
Early iPhone Days
In the fourth quarter of 2006, the year before the iPhone debuted, Apple posted sales of $4.84 billion. Apple reported full-year revenues of $19.32 billion that year, well above its 2005 net sales of $13.93 billion.
Then everything changed after Steve Jobs introduced the first iPhone in 2007. Apple sold 1.1 million iPhones in Q4 that year, to bring the full-year total to 1.4 million. This helped boost full-year revenues to $24 billion. By 2008, Apple’s full-year sales reached $37.49 billion.
Next Decade
Just eight years ago, in 2010, Apple reported total sales of $65.23 billion. But things hadn’t really even taken off yet. One year later, the iPhone maker pulled in $108.25 billion, which marked a 66% jump from the year ago-period and a 677% surge from 2005.
In less than five years, Apple went from total sales of $24 billion to fourth quarter revenues of $28.27 billion. Apple’s sales then hit $182.79 billion in 2014 and climbed to $233.72 billion the following year.
Apple’s sales soared more than 510% over the last 10 years, as it racked up a total of $1.44 trillion in revenues. The company’s stock price clearly followed, but just looking at the chart is still somewhat mind-blowing.
However, over the last few years, Apple’s outsized growth has slowed substantially. In fact, Apple reported full-year 2017 revenues of $229.23 billion, which marked a decline from 2015.
Q1 2018
Apple’s Q1 revenues climbed just 13% to reach of $88.29 billion, with its flagship product accounting for 69.7% of total revenues. On top of that, at 77.32 million, iPhone unit sales came in nearly 2.5 million under our estimates. This miss not only occurred during the vitally important holiday quarter but also during the first full period that Apple’s new iPhone X was on the market.
Apple’s Services revenue, which includes Apple Music, Apple Pay, iTunes, AppleCare, and more, did surge 18% year over year to hit $8.47 billion. Services sales still only accounted for roughly 9.5% of total sales, but the segment expanded more quickly than iPhone, iPad, and Mac sales, while also generating more revenue than the latter two.
Outlook
Apple needs to boost sales outside of its iPhone business if the company hopes to continue to expand at a rapid pace, as the history of consumer electronics has proven that products rarely remain king forever—especially as the market becomes more saturated.
With that said, our current Zacks Consensus Estimate is calling for Apple to report revenues of $61.42 billion in the second quarter, which would mark 16% growth from the year-ago period. Meanwhile, Apple’s full-year revenues are expected to climb 13% to hit $259.54 billion. Investors should also note that Apple hopes to push Services revenues to $40 billion a year by 2020.
Bottom Line
Apple is clearly still projected to grow its top line at a strong rate for a company of its size and age. But it would seem that Apple’s days of 60% or even 30% growth are likely gone for good.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year. See these high-potential stocks free >>.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Centene, QIWI, Apple, Amazon and Alphabet highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – April 6, 2018 – Zacks Equity Research highlights Centene (CNC - Free Report) as the Bull of the Day, QIWI plc (QIWI - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Apple (AAPL - Free Report) , Amazon (AMZN - Free Report) and Alphabet (GOOGL - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
Centene is one of the largest managed care providers in the US, serving over 12 million people in 14 states.
In addition to being the largest Medicaid Managed Care Organization in the country, Centene is also the largest carrier on the Health Insurance Marketplace and a national leader in managed long-term services and supports.
Centene delivered another strong quarter and outlook on February 6 and analysts responded by raising 2018 full-year earnings estimates 21% from $5.86 to $7.09. The 2019 consensus also vaulted 23% from $6.63 to $8.17.
And this followed the solid company news just a few months ago. Here's what I wrote on December 19...
The company held its annual Investor Day on December 15 and several analysts came away increasingly bullish on the stock. Here's was the word from investment bank Piper Jaffray where their price target on CNC was boosted from $112 to $134...
Piper Jaffray analyst Sarah James raised her price target for Centene to $134 saying the company's investor day "did not disappoint with a material guidance boost." Despite rallying 68% year-to-date, Centene is still the best buying opportunity in the group with potential for earnings upside and multiple expansion "once the market moves past the worst case scenario on reform," James told investors in a research note.
James also sees large scale reform as unlikely and the impact of block grants, which she views as likely, as being a "significant positive" for Centene and managed Medicaid.
Guidance Raised Again on Anticipated Deal Closing
At the December event, Centene provided a 2018 outlook with adjusted EPS of $5.47 to $5.87, vs a Wall Street consensus $5.50 to $5.55. The company saw 2018 revenue of $60.0 to $60.8 billion, vs the consensus of $54.95 billion.
Management also provided an update on their recent proposed $3.75 billion acquisition of Fidelis Care which would give the company significant new exposure to the New York market. Since the deal had not yet closed, analysts had to speculate on the impact of new revenues and synergies.
More than three months later, the deal has still not closed. But it looks like the company update in February solidified those expanded views of new revenues and synergies and firmer estimate revisions have finally started to roll in anyway on high confidence the deal does get done. More details below.
Bear of the Day:
QIWI plc is a $700 million provider of next generation payment services primarily in Russia. The company has an integrated network that facilitates payment services across physical, online and mobile channels.
The QIWI network enables merchants to accept cash and electronic payments from virtual wallets, and operates cash-collecting terminals and kiosks. QIWI plc is based in Moscow and went public in 2013.
I last wrote about QIWI as the Bear of the Day in August when shares were trading $17.50. After that, the stock slid to new 10-month lows under $14 by December.
The reason that QIWI is in the cellar of the Zacks Rank again is that earnings estimates recently took a big hit. In the past 30 days, the full-year 2018 EPS consensus dropped 12% from $1.20 to $1.08, representing -6% growth.
But 2019 profit projections were slashed by 29% from $2.17 to $1.54. While this figure still represents over 42% growth, it may be also be a mirage if history is any guide.
To tell the tale of a "serial earnings decliner" with a picture, here's the Zacks proprietary Price & Consensus chart which plots the stock price against changes in annual EPS projections...
The pattern is clear of optimistic analyst estimates a year or so out that inevitably get drastically cut.
What the company has going for it is a strong recovery in sales growth, with a 14% advance to $260 million expected again this year.
And while next year's revenue forecast of $305 million would be 17% growth, investors should wait and watch for the EPS estimates to make a solid turn before investing in QIWI.
The Zacks Rank will let you know.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>
Additional content:
After a Decade-Plus of Insane Growth, Is Apple’s Revenue Finally Plateauing?
Apple’s outsized growth since the iPhone launched has seen it become the world’s most valuable company, worth more than Amazon, Alphabet, and all the other tech giants. But nothing last forever, so let’s take a look at just how much Apple has grown since then, and see if these days are numbered.
Early iPhone Days
In the fourth quarter of 2006, the year before the iPhone debuted, Apple posted sales of $4.84 billion. Apple reported full-year revenues of $19.32 billion that year, well above its 2005 net sales of $13.93 billion.
Then everything changed after Steve Jobs introduced the first iPhone in 2007. Apple sold 1.1 million iPhones in Q4 that year, to bring the full-year total to 1.4 million. This helped boost full-year revenues to $24 billion. By 2008, Apple’s full-year sales reached $37.49 billion.
Next Decade
Just eight years ago, in 2010, Apple reported total sales of $65.23 billion. But things hadn’t really even taken off yet. One year later, the iPhone maker pulled in $108.25 billion, which marked a 66% jump from the year ago-period and a 677% surge from 2005.
In less than five years, Apple went from total sales of $24 billion to fourth quarter revenues of $28.27 billion. Apple’s sales then hit $182.79 billion in 2014 and climbed to $233.72 billion the following year.
Apple’s sales soared more than 510% over the last 10 years, as it racked up a total of $1.44 trillion in revenues. The company’s stock price clearly followed, but just looking at the chart is still somewhat mind-blowing.
However, over the last few years, Apple’s outsized growth has slowed substantially. In fact, Apple reported full-year 2017 revenues of $229.23 billion, which marked a decline from 2015.
Q1 2018
Apple’s Q1 revenues climbed just 13% to reach of $88.29 billion, with its flagship product accounting for 69.7% of total revenues. On top of that, at 77.32 million, iPhone unit sales came in nearly 2.5 million under our estimates. This miss not only occurred during the vitally important holiday quarter but also during the first full period that Apple’s new iPhone X was on the market.
Apple’s Services revenue, which includes Apple Music, Apple Pay, iTunes, AppleCare, and more, did surge 18% year over year to hit $8.47 billion. Services sales still only accounted for roughly 9.5% of total sales, but the segment expanded more quickly than iPhone, iPad, and Mac sales, while also generating more revenue than the latter two.
Outlook
Apple needs to boost sales outside of its iPhone business if the company hopes to continue to expand at a rapid pace, as the history of consumer electronics has proven that products rarely remain king forever—especially as the market becomes more saturated.
With that said, our current Zacks Consensus Estimate is calling for Apple to report revenues of $61.42 billion in the second quarter, which would mark 16% growth from the year-ago period. Meanwhile, Apple’s full-year revenues are expected to climb 13% to hit $259.54 billion. Investors should also note that Apple hopes to push Services revenues to $40 billion a year by 2020.
Bottom Line
Apple is clearly still projected to grow its top line at a strong rate for a company of its size and age. But it would seem that Apple’s days of 60% or even 30% growth are likely gone for good.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>
Get today’s Zacks #1 Stock of the Day with your free subscription to Profit from the Pros newsletter:
About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year. See these high-potential stocks free >>.
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Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.