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TD Cowen has reaffirmed its positive stance on Molina Healthcare (NYSE: NYSE:MOH), increasing the price target to $378 from $351, while maintaining a Buy rating on the stock.
The adjustment, which came on Monday, follows the company's second-quarter results, which supported the continuation of the 2024 guidance.
The analyst from TD Cowen noted that the model for Molina Healthcare remains largely unchanged post the quarterly report. The expectation is for incremental earnings per share (EPS) growth of $3.50, marking a 15% year-over-year increase, as the company heads into 2025.
Molina Healthcare's stock has witnessed a significant surge, with an 18% increase over the past two days. This jump in the stock's value has been a contributing factor to the revised price target, which now stands at 14 times the adjusted EPS estimate of $27.00 for the year 2025, said an analyst from TD Cowen.
Molina Healthcare recently reported its second-quarter 2024 earnings, announcing a figure of $5.86 per share, which aligns with analyst expectations. The company's full-year guidance was reaffirmed, projecting at least $23.50 in earnings per share and premium revenue reaching $38 billion. Despite a higher medical cost ratio (MCR) in its Medicaid business, Molina is confident about improvements in the latter part of the year, driven by rate adjustments and new store additions.
The company's Medicaid MCR stood at 90.8%, slightly above the target due to one-time adjustments. However, Molina expects this to improve with known rate adjustments and the addition of new stores. The acquisition of ConnectiCare and other M&A activities are part of Molina's growth initiatives.
Molina's second-quarter earnings call also discussed the challenges and strategic moves the company is making to ensure continued growth. Despite pressures on the Medicaid MCR, the company's proactive measures suggest a strategy to maintain profitability and deliver on its promises to shareholders.
InvestingPro Insights
In light of TD Cowen's optimistic outlook on Molina Healthcare (NYSE:MOH), recent data from InvestingPro provides additional context for investors considering the stock. Molina Healthcare holds a market capitalization of $19.92 billion, indicating a substantial presence in the market. The company's P/E ratio, a measure of its current share price relative to its per-share earnings, stands at 18.39, suggesting that investors are willing to pay a higher price for earnings growth potential. With a PEG ratio of 1.18, the stock's price is somewhat aligned with its earnings growth rate, offering a balanced view of its value proposition.
InvestingPro Tips highlight Molina Healthcare's strong liquidity position, as it holds more cash than debt on its balance sheet, which is a reassuring sign for investors. Additionally, the company has demonstrated a significant return over the last week, with a 15.8% price total return, reflecting recent positive market sentiment. This aligns with the stock's surge mentioned in the article. However, it's worth noting that six analysts have revised their earnings downwards for the upcoming period, which may suggest potential headwinds that investors should be aware of.
For those seeking a deeper dive into Molina Healthcare's financial health and future prospects, InvestingPro offers a wealth of additional tips. To explore these insights and inform your investment decisions, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. There are 12 more InvestingPro Tips available for Molina Healthcare, which could provide a comprehensive understanding of the company's market position and performance metrics.
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