Market Overview

Molina Healthcare's Issues Aren't Permanent, JPMorgan Says Amid Upgrade

Share:
Molina Healthcare's Issues Aren't Permanent, JPMorgan Says Amid Upgrade

Molina Healthcare, Inc. (NYSE: MOH) and CEO Joe Zubretsky made quite an impression at the recent JPMorgan Healthcare conference, and Wall Street took notice.

The Analyst

JPMorgan analyst Gary Taylor upgraded Molina stock from Neutral to Overweight and raised his price target from $65 to $103.

The Thesis

Zubretsky’s plan of getting back to the basics by implementing “managed care 101” contracting may be exactly what the company needs.

“Zubretsky did not provide financial guidance, but did provide a comprehensive overview of operational opportunities while suggesting that he ‘would not be happy’ if material margin recovery towards industry peers took as long as three years,” Taylor wrote in a Tuesday note.

Taylor said Molina should be able to expand pretax margins to levels approaching those of competitors Centene Corp (NYSE: CNC) and WellCare Health Plans, Inc. (NYSE: WCG).

JPMorgan has raised its earnings estimates for 2017, 2018 and 2019 from $0.00, $2.00 and $3.00, respectively, to 88 cents, $4.58 and $6.03. The firm anticipates after tax margins of 1.3 percent in 2018 and 2.0 percent in 2019 after factoring in tailwinds from tax reform. JPMorgan expects after-tax margins of 2.0 percent in 2018 and 2.2 percent in 2019 from Centene and WellCare.

JPMorgan’s new price target represents a risk-adjusted 17.0 times earnings multiple on its 2019 EPS estimate.

Price Action

Molina stock jumped 5 percent Tuesday morning following the upgrade. The stock is now up 54 percent in the past year.

Related Links:

Key Takeaways From The J.P. Morgan Healthcare Conference

3 Likely Health Care Disruptors In 2018

Latest Ratings for MOH

DateFirmActionFromTo
Jul 2020SVB LeerinkInitiates Coverage OnOutperform
Jun 2020Cowen & Co.UpgradesMarket PerformOutperform
May 2020Morgan StanleyMaintainsOverweight

View More Analyst Ratings for MOH
View the Latest Analyst Ratings

 

Related Articles (MOH)

View Comments and Join the Discussion!

Posted-In: Gary TaylorAnalyst Color Upgrades Health Care Price Target Top Stories Analyst Ratings General Best of Benzinga

Latest Ratings

StockFirmActionPT
ELFDA DavidsonMaintains24.0
NVDAB of A SecuritiesMaintains460.0
CBB of A SecuritiesMaintains114.0
BHCB of A SecuritiesMaintains14.0
AEEB of A SecuritiesMaintains79.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com