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Evaluating Molina Healthcare's (MOH) Future View: Hold or Fold?
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Molina Healthcare, Inc. (MOH - Free Report) is strategically positioned for growth, fueled by improving memberships, growing premiums, contract wins and rising investment income. The company's expanding Medicare presence and strong financial foundation serve as notable catalysts for its growth trajectory.
Long Beach, CA-based Molina Healthcare, with a market capitalization of $23.6 billion, offers managed healthcare services through government-sponsored healthcare programs. Courtesy of solid prospects, this currently Zacks Rank #3 (Hold) stock is worth holding on to at the moment.
In this analysis, we'll explore the growth drivers and estimates and highlight the key factors investors should monitor.
Let’s delve deeper.
The Zacks Consensus Estimate for MOH’s 2024 earnings is pegged at $23.62 per share, indicating 13.1% year-over-year growth. The estimate remained stable over the past week. Molina Healthcare beat on earnings in each of the last four quarters, with an average surprise of 7.6%. This is depicted in the figure below.
The consensus mark for 2024 revenues stands at $39.6 billion, suggesting 16.1% growth from a year ago. Molina Healthcare’s top line is poised to capitalize on increasing premium revenues and investment income. Our model predicts 16.5% year-over-year growth in 2024 premium revenues, along with a 28.2% year-over-year increase in investment income.
The company’s shares have gained 54.8% in the past year, outperforming the industry’s 6% growth, the Medical sector’s 8.3% increase and the S&P 500’s 29.4% jump. Thanks to its strong operations, the stock is expected to sustain its upward trajectory.
Increased premiums from the Medicaid, Medicare and Marketplace business and a growing membership base are expected to drive the company's top-line growth. We expect total memberships to witness around 14% year-over-year growth in 2024, supported by a nearly 12% increase in Medicaid and an almost 30% boost in Marketplace. Additionally, the expansion of Medicare memberships will likely contribute significantly to this positive trend.
The company expects adjusted net income to reach $1.4 billion in 2024, marking a 12.6% increase from the previous year. Its strategic pursuit of acquisitions, such as My Choice Wisconsin, Brand New Day and Central Health Plan of California, enhances its portfolio diversity and expands its geographical reach, contributing to its growth strategy.
Molina Healthcare closed the fourth quarter with $4.8 billion in cash and cash equivalents, significantly higher than its long-term debt of $2.2 billion. This balance sheet strength affords the company substantial financial flexibility. In 2023, net cash from operating activities jumped 115% year-over-year to $1.7 billion, reflecting the expansion of its operations.
Key Concerns
However, there are a few factors that investors should keep an eye on. One, for example, is rising total operating expenses, which jumped 45.8% in 2021, 15.1% in 2022 and 5.5% in 2023. We expect the metric to further jump nearly 16% this year. This trend can affect Molina Healthcare’s margins. Furthermore, its valuation looks expensive at the moment. Its forward 12-month price-to-earnings ratio is 16.83X, higher than the industry's average of 15.66X. Nevertheless, we believe that a systematic and strategic plan of action will drive growth in the long term.
The Zacks Consensus Estimate for Universal Health Services’ 2024 bottom line suggests 22.4% year-over-year growth. UHS has witnessed four upward estimate revisions over the past 30 days against one movement in the opposite direction. It beat earnings estimates in all the last four quarters, with an average surprise of 5.9%.
The Zacks Consensus Estimate for Cigna’s full-year 2024 earnings indicates a 13% year-over-year increase. CI beat earnings estimates in each of the past four quarters, with an average surprise of 2.9%. The consensus mark for revenues suggests 20.4% growth from the year-ago period.
The Zacks Consensus Estimate for Health Catalyst’s 2024 full-year earnings implies a 113.3% increase from the year-ago reported figure. HCAT beat earnings estimates in each of the last four quarters, with an average surprise of 247.9%. The consensus mark for its current-year revenues is pegged at $308.2 million, which indicates a 4.2% year-over-year increase.
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Evaluating Molina Healthcare's (MOH) Future View: Hold or Fold?
Molina Healthcare, Inc. (MOH - Free Report) is strategically positioned for growth, fueled by improving memberships, growing premiums, contract wins and rising investment income. The company's expanding Medicare presence and strong financial foundation serve as notable catalysts for its growth trajectory.
Long Beach, CA-based Molina Healthcare, with a market capitalization of $23.6 billion, offers managed healthcare services through government-sponsored healthcare programs. Courtesy of solid prospects, this currently Zacks Rank #3 (Hold) stock is worth holding on to at the moment.
In this analysis, we'll explore the growth drivers and estimates and highlight the key factors investors should monitor.
Let’s delve deeper.
The Zacks Consensus Estimate for MOH’s 2024 earnings is pegged at $23.62 per share, indicating 13.1% year-over-year growth. The estimate remained stable over the past week. Molina Healthcare beat on earnings in each of the last four quarters, with an average surprise of 7.6%. This is depicted in the figure below.
Molina Healthcare, Inc Price and EPS Surprise
Molina Healthcare, Inc price-eps-surprise | Molina Healthcare, Inc Quote
The consensus mark for 2024 revenues stands at $39.6 billion, suggesting 16.1% growth from a year ago. Molina Healthcare’s top line is poised to capitalize on increasing premium revenues and investment income. Our model predicts 16.5% year-over-year growth in 2024 premium revenues, along with a 28.2% year-over-year increase in investment income.
The company’s shares have gained 54.8% in the past year, outperforming the industry’s 6% growth, the Medical sector’s 8.3% increase and the S&P 500’s 29.4% jump. Thanks to its strong operations, the stock is expected to sustain its upward trajectory.
Increased premiums from the Medicaid, Medicare and Marketplace business and a growing membership base are expected to drive the company's top-line growth. We expect total memberships to witness around 14% year-over-year growth in 2024, supported by a nearly 12% increase in Medicaid and an almost 30% boost in Marketplace. Additionally, the expansion of Medicare memberships will likely contribute significantly to this positive trend.
The company expects adjusted net income to reach $1.4 billion in 2024, marking a 12.6% increase from the previous year. Its strategic pursuit of acquisitions, such as My Choice Wisconsin, Brand New Day and Central Health Plan of California, enhances its portfolio diversity and expands its geographical reach, contributing to its growth strategy.
Molina Healthcare closed the fourth quarter with $4.8 billion in cash and cash equivalents, significantly higher than its long-term debt of $2.2 billion. This balance sheet strength affords the company substantial financial flexibility. In 2023, net cash from operating activities jumped 115% year-over-year to $1.7 billion, reflecting the expansion of its operations.
Key Concerns
However, there are a few factors that investors should keep an eye on. One, for example, is rising total operating expenses, which jumped 45.8% in 2021, 15.1% in 2022 and 5.5% in 2023. We expect the metric to further jump nearly 16% this year. This trend can affect Molina Healthcare’s margins. Furthermore, its valuation looks expensive at the moment. Its forward 12-month price-to-earnings ratio is 16.83X, higher than the industry's average of 15.66X. Nevertheless, we believe that a systematic and strategic plan of action will drive growth in the long term.
Key Medical Picks
Enhancing the array of healthcare options, some better-ranked and promising stocks in the Medical sector are Universal Health Services, Inc. (UHS - Free Report) , The Cigna Group (CI - Free Report) and Health Catalyst, Inc. (HCAT - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Universal Health Services’ 2024 bottom line suggests 22.4% year-over-year growth. UHS has witnessed four upward estimate revisions over the past 30 days against one movement in the opposite direction. It beat earnings estimates in all the last four quarters, with an average surprise of 5.9%.
The Zacks Consensus Estimate for Cigna’s full-year 2024 earnings indicates a 13% year-over-year increase. CI beat earnings estimates in each of the past four quarters, with an average surprise of 2.9%. The consensus mark for revenues suggests 20.4% growth from the year-ago period.
The Zacks Consensus Estimate for Health Catalyst’s 2024 full-year earnings implies a 113.3% increase from the year-ago reported figure. HCAT beat earnings estimates in each of the last four quarters, with an average surprise of 247.9%. The consensus mark for its current-year revenues is pegged at $308.2 million, which indicates a 4.2% year-over-year increase.