Crispr Therapeutics shares tumble after significant earnings miss
Investing.com - Barclays (LON:BARC) has reduced its price target on Molina Healthcare (NYSE:MOH) to $270 from $347 while maintaining an Equalweight rating, following the company’s disappointing pre-announcement on Monday. The stock, currently trading near its 52-week low of $236.37, appears undervalued according to InvestingPro analysis, with analysts seeing up to 54% upside potential.
Molina Healthcare pre-announced second-quarter earnings per share of $5.50, representing an 11% miss compared to Wall Street expectations of $6.20, and cut its full-year EPS guidance by 10% from over $24.50 to a range of $21.50-22.50. Despite these challenges, the company maintains a GREAT financial health score and trades at an attractive P/E ratio of 15.2x. InvestingPro subscribers have access to 10+ additional key insights about MOH’s valuation and financial strength.
The healthcare insurer cited cost trend pressure across all three of its business lines – Medicaid, Affordable Care Act (ACA) marketplace, and Medicare – which it expects to persist into the second half of 2025.
Barclays noted that based on 2024 CMS risk adjustment data released last week, there was an estimated $0.18 gross EPS headwind, which should be reflected in Molina’s second-quarter results, accounting for approximately 120 basis points to the quarter’s Marketplace medical loss ratio.
The research firm has revised its 2025 EPS estimate for Molina down to $21.75 based on an enterprise medical loss ratio revision from 88.8% to 89.3%, and reduced its 2026 EPS projection from $27.91 to $23.50, reflecting elevated cost trend uncertainty across Molina’s key lines of business.
In other recent news, Molina Healthcare announced a reduction in its earnings forecast for 2025 due to rising medical costs, estimating second-quarter adjusted earnings at approximately $5.50 per share. The company has adjusted its full-year 2025 earnings guidance to between $21.50 and $22.50 per share, citing ongoing medical cost pressures in its Medicaid, Medicare, and marketplace segments. Additionally, Morgan Stanley (NYSE:MS) initiated coverage of Molina Healthcare with an Overweight rating, setting a price target of $364, and highlighting the company’s potential for premium revenue growth and opportunities in Dual Eligible Special Needs Plans. Meanwhile, Cantor Fitzgerald maintained its Overweight rating on Molina Healthcare, with a price target of $356, expressing confidence in the company’s valuation and potential for improved margins in Medicaid and Medicare by 2025. Cantor Fitzgerald also noted Molina’s ability to surpass expectations in the Medicaid Medical (TASE:BLWV) Loss Ratio, seeing it as a positive development. The firm expects a 13-15% increase in earnings per share for 2025, aligning with Molina’s confirmed guidance and long-term growth expectations. BofA Securities, on the other hand, lowered its price target for Centene (NYSE:CNC), a competitor, to $52, highlighting concerns over the marketplace environment and Medicaid trends, which may also affect Molina Healthcare. Despite these challenges, Molina Healthcare’s strategic focus on government-sponsored managed care products is expected to drive continued growth and industry-leading margins.
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