UPDATE: Bank Of America Reiterates On Molina Healthcare At High End Of Guidance Range

In a report published Friday, Bank of America analyst Kevin Fischbeck reiterated a Buy rating on Molina Healthcare (NYSE: MOH), and raised the price target from $42.00 to $44.00.

In the report, Bank of America noted, “Q1 continuing ops EPS was $0.10, $0.13 above our est/$0.15 above consensus, driven by higher ACA fee recognition, higher rev, lower MLR, and lower cost of services, partially offset by higher opex. MOH reiterated EPS guidance of $1.65-$2.15, but now feels more comfortable at the high end of the range. In our view, guidance doesn't scream conservatism at it assumes they recoup the entire industry fee and tax impact as well as a $6m quality payment in TX by year end, but these seem manageable.

"The biggest issue is that new revenue is generally being booked at MLRs more consistent with mature business, and we remain somewhat cautious on this point due to low visibility into March/April claims. Nevertheless, the upside in Q1 gets MOH off to a good start and we are increasing our 2014/2015/2016 estimates to $2.05/$2.44/$2.96 from $1.95/$2.38/$2.90 and raising our PO to $44.”

Molina Healthcare closed on Thursday at $37.82.