Molina Healthcare's Downgrade Tied To Potential Trump Presidency, Margin Challenges

Shares of Molina Healthcare Inc MOH added over 5% last month and showed signs of being overbought.

The company is poised to witness rate pressure in 2025, following a period of elevated margins, according to BofA Securities.

The Molina Healthcare Analyst: Kevin Fischbeck downgraded the rating for Molina Healthcare from Neutral to Underperform, while keeping the price target unchanged at $439.

The Molina Healthcare Thesis: Medicaid-related insurers are likely to witness margin pressure on “large portions of their membership,” Fischbeck said in the downgrade note.

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“Once redeterminations conclude and enrollment stabilizes, we would expect states to adjust rates down such that insurers are earning more normalized margins, potentially pressuring 2025 margins,” the analyst wrote. Following 12 to 15 months of high activity for large Medicaid re-procurements, the RFP pipeline could slow, limiting catalysts, he added.

“Trump presidency would likely weigh on enrollment/sentiment,” Fischbeck stated. He further said that Molina Healthcare’s stock is currently trading at parity with UnitedHealth Group Inc UNH, versus at a 22% discount average over the past five years.

MOH Price Action: Shares of Molina Healthcare had declined by 0.78% to $407.17 at the time of publication on Monday.

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