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Compelling Reasons to Hold Molina Healthcare (MOH) Stock Now
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Molina Healthcare, Inc. (MOH - Free Report) benefits on the back of growing premiums, contract wins, acquisitions and a sound financial position. A solid 2024 earnings per share outlook also reinforces investors’ confidence in the stock.
Zacks Rank & Price Performance
Molina Healthcare currently carries a Zacks Rank #3 (Hold).
The stock has gained 20.9% in the past month compared with the industry’s 3.5% growth. The Zacks Medical sector has rallied 2.6% while the S&P 500 composite dipped 0.6% in the same time frame.
Image Source: Zacks Investment Research
Robust Growth Prospects
The Zacks Consensus Estimate for Molina Healthcare’s 2024 earnings is pegged at $23.50 per share, indicating an improvement of 12.6% from the year-earlier reading. The consensus mark for 2024 revenues is pegged at $39.9 billion, indicating 17.2% growth from the prior-year figure.
The Zacks Consensus Estimate for 2025 earnings is pegged at $26.53 per share, indicating an improvement of 12.9% from the 2024 estimate. The consensus mark for revenues is pegged at $43.1 billion, indicating 7.9% growth from the 2024 estimate.
Impressive Earnings Surprise History
MOH’s bottom line outpaced earnings estimates in each of the trailing four quarters, the average surprise being 3.14%.
Solid Return on Equity
The return on equity for Molina Healthcare is currently 28.1%, which is higher than the industry’s average of 23.9%. The figure substantiates the company’s efficiency in utilizing shareholders’ funds.
A Strong 2024 EPS Outlook
Management anticipates adjusted earnings per share to be a minimum of $23.50 for this year, which indicates around 13% growth from the 2023 figure.
Key Business Tailwinds
Molina Healthcare's premium revenues have been bolstered by an expanding customer base, driven by the strength of its Medicaid and Medicare businesses. In the first half of 2024, premium revenues grew 19% year over year. Management projects premium revenues to witness 13-15% long-term growth.
The company’s affordable health plans, offering comprehensive benefits, have led to contract wins that contribute to membership growth. It was awarded with new Medicaid contracts in Florida and Michigan this year. Medicaid and Medicare membership witnessed year-over-year increases of 4.2% and 51.2%, respectively, as of Jun 30, 2024.
An aging U.S. population, particularly the medically vulnerable demographic, is likely to sustain the strong demand for Molina Healthcare’s Medicare plans, which cater to individuals aged 65 and older.
Over the years, MOH has expanded its capabilities, diversified its revenue streams and strengthened its geographic presence through a series of acquisitions. It purchased Bright Healthcare’s California Medicare business in January 2024. This July, Molina Healthcare inked a definitive agreement to purchase ConnectiCare, which is expected to bolster the health insurer’s presence in Connecticut. The transaction is expected to close in the first half of 2025, upon obtaining the necessary federal and state regulatory approvals, along with the fulfillment of other standard closing conditions.
Molina Healthcare’s financial strength enables continued business investment. Sound cash reserves and strong cash flow generation underscore its financial strength. Cash and cash equivalents came in at $4.4 billion as of Jun 30, 2024.
Risks
Despite the upside potential, there are a few factors that investors should keep an eye on.
MOH continues to witness an escalating expense level as a result of higher medical care costs, and general and administrative expenses. Higher expenses can put pressure on the company’s margins in the days ahead.
Molina Healthcare's medical care ratio (MCR) continues to be on the rise. A higher MCR indicates a lower proportion of remaining premiums after the payment of insurance claims. In the first half of 2024, the MCR deteriorated 180 basis points in the Medicaid business compared with the same period in 2023.
Stocks to Consider
Some better-ranked stocks in the Medical space are Intuitive Surgical, Inc. (ISRG - Free Report) , Boston Scientific Corporation (BSX - Free Report) and The Ensign Group, Inc. (ENSG - Free Report) . While Intuitive Surgical currently sports a Zacks Rank #1 (Strong Buy), Boston Scientific and Ensign Group carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Intuitive Surgical’s earnings surpassed estimates in each of the last four quarters, the average surprise being 8.97%. The Zacks Consensus Estimate for ISRG’s 2024 earnings indicates 16.8% growth from the prior-year tally. The consensus mark for revenues implies an improvement of 13.7% from the year-ago actual. The consensus mark for ISRG’s earnings has moved 6.5% north in the past 30 days.
The bottom line of Boston Scientific beat estimates in each of the trailing four quarters, the average surprise being 7.18%. The Zacks Consensus Estimate for BSX’s 2024 earnings indicates an improvement of 17.1% from the year-ago figure. The consensus mark for revenues implies an improvement of 14.2% from the prior-year tally. The consensus mark for BSX’s earnings has moved 3.4% north in the past 30 days.
Ensign Group’s earnings outpaced estimates in each of the trailing four quarters, the average surprise being 1.40%. The Zacks Consensus Estimate for ENSG’s 2024 earnings indicates an improvement of 14.1% from the year-ago actual. The consensus mark for revenues implies 13.1% growth from the year-ago actual. The consensus mark for ENSG’s earnings has moved 0.7% north in the past 30 days.
Shares of Intuitive Surgical, Boston Scientific and Ensign Group have gained 4.2%, 0.3% and 3.5%, respectively, in the past month.
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Compelling Reasons to Hold Molina Healthcare (MOH) Stock Now
Molina Healthcare, Inc. (MOH - Free Report) benefits on the back of growing premiums, contract wins, acquisitions and a sound financial position. A solid 2024 earnings per share outlook also reinforces investors’ confidence in the stock.
Zacks Rank & Price Performance
Molina Healthcare currently carries a Zacks Rank #3 (Hold).
The stock has gained 20.9% in the past month compared with the industry’s 3.5% growth. The Zacks Medical sector has rallied 2.6% while the S&P 500 composite dipped 0.6% in the same time frame.
Image Source: Zacks Investment Research
Robust Growth Prospects
The Zacks Consensus Estimate for Molina Healthcare’s 2024 earnings is pegged at $23.50 per share, indicating an improvement of 12.6% from the year-earlier reading. The consensus mark for 2024 revenues is pegged at $39.9 billion, indicating 17.2% growth from the prior-year figure.
The Zacks Consensus Estimate for 2025 earnings is pegged at $26.53 per share, indicating an improvement of 12.9% from the 2024 estimate. The consensus mark for revenues is pegged at $43.1 billion, indicating 7.9% growth from the 2024 estimate.
Impressive Earnings Surprise History
MOH’s bottom line outpaced earnings estimates in each of the trailing four quarters, the average surprise being 3.14%.
Solid Return on Equity
The return on equity for Molina Healthcare is currently 28.1%, which is higher than the industry’s average of 23.9%. The figure substantiates the company’s efficiency in utilizing shareholders’ funds.
A Strong 2024 EPS Outlook
Management anticipates adjusted earnings per share to be a minimum of $23.50 for this year, which indicates around 13% growth from the 2023 figure.
Key Business Tailwinds
Molina Healthcare's premium revenues have been bolstered by an expanding customer base, driven by the strength of its Medicaid and Medicare businesses. In the first half of 2024, premium revenues grew 19% year over year. Management projects premium revenues to witness 13-15% long-term growth.
The company’s affordable health plans, offering comprehensive benefits, have led to contract wins that contribute to membership growth. It was awarded with new Medicaid contracts in Florida and Michigan this year. Medicaid and Medicare membership witnessed year-over-year increases of 4.2% and 51.2%, respectively, as of Jun 30, 2024.
An aging U.S. population, particularly the medically vulnerable demographic, is likely to sustain the strong demand for Molina Healthcare’s Medicare plans, which cater to individuals aged 65 and older.
Over the years, MOH has expanded its capabilities, diversified its revenue streams and strengthened its geographic presence through a series of acquisitions. It purchased Bright Healthcare’s California Medicare business in January 2024. This July, Molina Healthcare inked a definitive agreement to purchase ConnectiCare, which is expected to bolster the health insurer’s presence in Connecticut. The transaction is expected to close in the first half of 2025, upon obtaining the necessary federal and state regulatory approvals, along with the fulfillment of other standard closing conditions.
Molina Healthcare’s financial strength enables continued business investment. Sound cash reserves and strong cash flow generation underscore its financial strength. Cash and cash equivalents came in at $4.4 billion as of Jun 30, 2024.
Risks
Despite the upside potential, there are a few factors that investors should keep an eye on.
MOH continues to witness an escalating expense level as a result of higher medical care costs, and general and administrative expenses. Higher expenses can put pressure on the company’s margins in the days ahead.
Molina Healthcare's medical care ratio (MCR) continues to be on the rise. A higher MCR indicates a lower proportion of remaining premiums after the payment of insurance claims. In the first half of 2024, the MCR deteriorated 180 basis points in the Medicaid business compared with the same period in 2023.
Stocks to Consider
Some better-ranked stocks in the Medical space are Intuitive Surgical, Inc. (ISRG - Free Report) , Boston Scientific Corporation (BSX - Free Report) and The Ensign Group, Inc. (ENSG - Free Report) . While Intuitive Surgical currently sports a Zacks Rank #1 (Strong Buy), Boston Scientific and Ensign Group carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Intuitive Surgical’s earnings surpassed estimates in each of the last four quarters, the average surprise being 8.97%. The Zacks Consensus Estimate for ISRG’s 2024 earnings indicates 16.8% growth from the prior-year tally. The consensus mark for revenues implies an improvement of 13.7% from the year-ago actual. The consensus mark for ISRG’s earnings has moved 6.5% north in the past 30 days.
The bottom line of Boston Scientific beat estimates in each of the trailing four quarters, the average surprise being 7.18%. The Zacks Consensus Estimate for BSX’s 2024 earnings indicates an improvement of 17.1% from the year-ago figure. The consensus mark for revenues implies an improvement of 14.2% from the prior-year tally. The consensus mark for BSX’s earnings has moved 3.4% north in the past 30 days.
Ensign Group’s earnings outpaced estimates in each of the trailing four quarters, the average surprise being 1.40%. The Zacks Consensus Estimate for ENSG’s 2024 earnings indicates an improvement of 14.1% from the year-ago actual. The consensus mark for revenues implies 13.1% growth from the year-ago actual. The consensus mark for ENSG’s earnings has moved 0.7% north in the past 30 days.
Shares of Intuitive Surgical, Boston Scientific and Ensign Group have gained 4.2%, 0.3% and 3.5%, respectively, in the past month.