81.8% Probability This Health Stock Rises

If past data is to be believed, there is an 81.8% probability that Centene is likely to pop by double-digit percentage levels over the next 3 months.

Remarkably in 17 of the past 22 years, Centene has gone on a bullish run in the coming months, but it’s not entirely clear why, so we peeled back the layers of the onion to reveal the cause and whether it’s repeatable again this year.

Key Points

• During spring, sector allocation and anticipation of summer doldrums often leads investors to migrate to healthcare stocks, such as Centene.
• Federal and state budget discussions and healthcare policy updates in spring often favorably impact Centene by anticipating changes in healthcare funding and expansions, prompting bullish investor activity.
• Post-open enrollment adjustments and seasonal health trends, like increased service utilization due to allergies or flu, positively influence Centene’s financial performance and attract investment.

Why Does Centene Go Up At This Time of Year?

A primary reason for Centene’s strength during this period stems from sector rotation based on macroeconomic indicators and seasonal trends. As a defensive sector, healthcare attracts investment during periods of market uncertainty that often coincide with the end of the fiscal quarter or half-year assessments.

In addition, the stock market experiences shifts in liquidity and trading volume as the summer months approach, leading investors to adjust their portfolios in the spring.

The allocation of government budgets and policy updates are a further reason for seasonal strength. The beginning of the fiscal year for the federal government falls on October 1, but significant discussions, proposals, and preliminary budget announcements often occur in the spring months.

These announcements frequently include changes to healthcare funding, Medicaid expansions, or adjustments to healthcare policies that directly affect companies like Centene. Investors look to anticipate these changes, leading to increased trading volumes and, more often than not, bullish price movements.

In the same vein, in light of Centene’s substantial involvement in state-managed healthcare programs, state budget cycles, which often culminate in late spring or early summer, can have a substantial impact. States often announce expansions of services or modifications to existing healthcare programs at this time of year, and thereby influence Centene’s potential revenue streams and profitability.

More Bullish Tailwinds

The early months of the year are often when individuals make changes to their health insurance plans, influenced by open enrollment periods that end in December of the previous year. By April and May, Centene begins to see the operational impacts of these enrollment changes, supporting stock prices as investors react to new subscriber numbers or changes in service uptake.

The prevalence of seasonal health issues, such as allergies or the tail end of the flu season also indirectly influence Centene’s performance. An increase in healthcare utilization during these months reflects positively on the company’s short-term financials, and so attracts investor interest. Moreover, increased utilization of healthcare services before deductibles reset acts as a tailwind.