Street Calls of the Week
Investing.com - Goldman Sachs has lowered its price target on Molina Healthcare (NYSE:MOH) to $167.00 from $207.00 while maintaining a Neutral rating on the stock. The company, currently trading at $161 with a P/E ratio of 12, appears undervalued according to InvestingPro analysis, which has identified 10+ additional investment insights for this healthcare provider.
The price target reduction follows Molina’s third-quarter adjusted earnings per share missing consensus estimates by 53% and the company lowering its 2025 adjusted EPS guidance by approximately 26%. Despite these challenges, InvestingPro data shows Molina maintains a "GREAT" overall financial health score of 3.15, with particularly strong profitability metrics. Goldman Sachs attributed these disappointing results to margin compression driven by the downward trend in the government-sponsored underwriting cycle.
Molina Healthcare shares underperformed the market on October 23, falling 17.5% compared to the S&P 500’s 0.6% gain. The company also provided an initial 2026 earnings outlook that assumes minimal improvement from the revised 2025 levels.
The healthcare provider’s 2026 framework anticipates incremental improvement in Medicaid profitability while projecting break-even performance for its Health Insurance Exchange and Medicare segments. Goldman Sachs expressed surprise at Molina’s break-even forecast for its Health Insurance Exchange business given the lack of visibility into potential extensions of enhanced Advanced Premium Tax Credits.
Goldman Sachs maintained its Neutral rating on Molina Healthcare, noting that its cautious view on Medicaid and Health Insurance Exchange margins into 2026 was validated by the third-quarter results, which showed margin shortfalls in both categories compared to previous expectations. Despite margin pressures, the company has maintained strong revenue growth of 15.57% over the last twelve months. For deeper insights into Molina’s valuation and future prospects, investors can access the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Molina Healthcare reported its third-quarter 2025 financial results, showcasing a mixed performance. The company’s revenue exceeded expectations, reaching $11.48 billion, which was above the forecast of $10.94 billion by 4.94%. However, the earnings per share (EPS) fell short, coming in at $1.84 compared to the anticipated $3.91, marking a 52.94% miss. This discrepancy between revenue and EPS has raised concerns among investors. Barclays responded by downgrading Molina Healthcare from Equalweight to Underweight, citing earnings concerns as the primary reason. The price target was also reduced from $185.00 to $144.00. These developments have led to significant investor reactions, as reflected in the stock’s performance. The downgrade and financial results are pivotal as they shape analysts’ and investors’ outlooks on Molina Healthcare’s future.
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