Shares of Molina Healthcare Inc MOH it added more than 5% last month and has shown signs of being overbought.
According to BofA Securities, the company is poised to experience rate pressure in 2025, following a period of high margins.
Healthcare analyst Molina: Kevin Fischbeck downgraded Molina Healthcare from Neutral to Underperform, keeping his price target unchanged at $439.
Molina’s health thesis: Medicaid-related insurers are likely to see margin pressures on “a large portion of their enrollees,” Fischbeck said in the downgrade note.
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“Once redeterminations conclude and enrollment stabilizes, we would expect states to adjust rates downward such that insurers earn more normalized margins, potentially putting pressure on 2025 margins,” the analyst wrote. After 12 to 15 months of intense activity on large Medicaid replenishments, the RFP pipeline could slow, limiting catalysts, he added.
“The Trump presidency would likely weigh on enrollment/sentiment,” Fischbeck said. He further stated that Molina Healthcare shares are currently trading at parity UnitedHealth Group Inc UNHcompared to an average discount of 22% over the last five years.
MOH Price Action: Molina Healthcare shares were down 0.78% at $407.17 on Monday at the time of publication.
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