Cantor maintains Overweight rating on Molina Healthcare stock

On Wednesday, Molina Healthcare Inc . (NYSE:MOH) shares maintained their Overweight rating with a steady price target of $356.00, as affirmed by Cantor Fitzgerald. Currently trading at $268.56, the stock is near its 52-week low, with InvestingPro analysis indicating the stock is undervalued. The firm’s analysis highlighted Molina Healthcare’s significant exposure to Medicaid expansion, which is a substantial part of the company’s revenue stream.Want deeper insights? InvestingPro subscribers have access to 12 additional expert tips and comprehensive financial metrics for Molina Healthcare.

Molina Healthcare reported earnings per share (EPS) of $0.29 with revenues amounting to $4.3 billion. The company, with a market capitalization of $14.88 billion and impressive revenue growth of 18.67% over the last twelve months, has a notable presence in states with trigger laws, which could affect Medicaid expansion and, consequently, the company’s financial performance. According to Cantor Fitzgerald’s estimates, Molina Healthcare has exposure to Medicaid expansion lives that could generate $1.65 EPS from an estimated $20.2 billion in revenue.

The company operates in 21 states, out of which 14 have adopted Medicaid expansion. This expansion is estimated to cover approximately 1,065,000 lives, accounting for 22% of Molina Healthcare’s Medicaid book. Among these states, six—Arizona, Idaho, Illinois, Iowa, New Mexico, and Utah—have enacted trigger laws. These laws could roll back Medicaid expansion if federal funding drops below 90%. In these states, Molina Healthcare is estimated to cover around 190,000 lives, which represents 4% of its Medicaid book.

Cantor Fitzgerald’s reiteration of the Overweight rating suggests confidence in Molina Healthcare’s market position and its ability to navigate the complexities of state-level healthcare regulations. The $356.00 price target remains unchanged, indicating the firm’s positive outlook on the stock’s potential performance.

In other recent news, Molina Healthcare Inc. reported its fourth-quarter 2024 earnings, which revealed an adjusted earnings per share (EPS) of $5.05, falling short of the expected $5.77. Despite this miss, the company’s revenue exceeded forecasts, reaching $10.5 billion compared to the anticipated $10.32 billion. The company also noted a full-year 2024 EPS growth of 8.5% year-over-year. Additionally, Molina Healthcare completed the acquisition of ConnectiCare, which is projected to contribute $1.2 billion in revenue for 2025. Analyst firms have highlighted concerns about the company’s future earnings consistency, given the challenges in the Medicaid and Medicare markets. However, Molina Healthcare remains optimistic, projecting a premium revenue of $42 billion for 2025, which suggests a 9% growth. Furthermore, the company anticipates an adjusted EPS of $24.50 for the upcoming year, indicating at least an 8% year-over-year increase. These developments reflect Molina Healthcare’s strategic growth initiatives and ongoing adjustments in a challenging market environment.

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