Molina Healthcare’s Stock Gains After Solid Q3 Earnings, Yet Yearly Performance Lags
Company Overview and Market Performance
Long Beach, California-based Molina Healthcare, Inc. (MOH) specializes in managed healthcare services, primarily for low-income families and individuals, through programs like Medicaid, Medicare, and state insurance marketplaces. With a market capitalization of approximately $17 billion, it operates in nearly 20 U.S. states across various segments, including Medicaid, Medicare, and Marketplace.
Stock Performance Compared to the Market
Over the past year, Molina Healthcare’s stock has faced significant challenges. The MOH stock has decreased by 17.8% year-to-date (YTD) and 19.3% over the past 52 weeks. In contrast, the S&P 500 Index ($SPX) has enjoyed gains of 26.2% in 2024 and 32.1% over the last year.
When looking at the SPDR S&P Health Care Services ETF (XHS), MOH stock also falls short, lagging behind its YTD gains of 9.4% and its 52-week returns of 13.1%.
Positive Q3 Earnings Report
A notable turnaround came following Molina Healthcare’s Q3 earnings report released on October 23, where the stock soared by 17.7%. The company displayed strong operational discipline amidst challenging conditions caused by redeterminations. Fueled by new contracts, acquisitions, and growth within its existing operations, Molina’s premium revenue jumped 17.6% year-over-year, reaching $9.7 billion. Furthermore, total revenue climbed to $10.3 billion, reflecting a 21% year-over-year increase that exceeded analysts’ expectations. The company also reported significant profitability improvements, with adjusted net income rising by over 18% year-over-year to $347 million, and adjusted earnings per share (EPS) of $6.01 slightly surpassing consensus estimates, which boosted investor confidence.
Future Earnings Projections
Looking ahead to the current fiscal year ending in December, analysts forecast a 12.3% increase in adjusted EPS to $23.44. Molina Healthcare has a history of outperforming analysts’ earnings estimates, having done so for the past four quarters.
Analysts’ Ratings and Price Targets
The consensus rating for MOH stock is currently a “Moderate Buy.” Of the 14 analysts covering the stock, six recommend a “Strong Buy,” seven suggest “Hold,” and one indicates a “Moderate Sell” rating.
On November 8, Barclays PLC (BCS) analyst Andrew Mok upheld a “Hold” rating with a price target of $372, implying a 25.3% upside from current levels. The mean price target for MOH stands at $367, representing a 23.6% premium, while the highest forecast of $406 suggests a potential upside of 36.8%.
On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
