Bear of the Day: Molina Healthcare (MOH)

Molina Healthcare provides managed healthcare services to low-income families and individuals through Medicare and Medicaid programs along with state insurance marketplaces. Molina is a multi-state health care organization and headquartered in Long Beach, California.

The company faces escalating operational and financial pressures that threaten its outlook. Increasing regulatory uncertainty tied to ACA subsidies inhibits visibility and coincides with degrading Medicaid enrollment trends. Medicaid membership declined 5.2% in the first nine months of 2025, signaling a heavy burden on enrollment growth.

High costs remain a concern, with operating expenses swelling consistently over the past few years and pressuring margins. Profitability challenges have intensified further as utilization rises, reflected in a steadily worsening medical care ratio and reduced EPS guidance for 2025.

The Zacks Rundown

A Zacks Rank #5 (Strong Sell) stock, Molina Healthcare MOH is a component of the Zacks Medical – HMOs industry group, which currently ranks in the bottom 16% out of approximately 250 Zacks Ranked Industries. As such, we expect this industry group as a whole to underperform the market over the next 3 to 6 months.

Stocks in the bottom tiers of industries can often be intriguing short candidates. While individual stocks have the ability to outperform even when they’re part of a lagging industry, the inclusion in a weaker group serves as a headwind for any potential rallies and the journey forward is that much more difficult.

Molina shares have been underperforming the market over the past year. The stock hit a 52-week low last month and represents a compelling short opportunity as we near the end of 2025.

Recent Earnings Misses & Deteriorating Outlook

Molina Healthcare has fallen short of earnings estimates in three of the past four quarters. Back in October, the company reported third-quarter earnings of $1.84 per share, missing the Zacks Consensus Estimate by a whopping -53.65%.

Molina has posted a trailing four-quarter average earnings miss of -15.8%. Consistently falling short of earnings estimates is a recipe for underperformance, and MOH is no exception.

The healthcare provider has been on the receiving end of negative earnings estimate revisions as of late. Looking at the fourth quarter, analysts have slashed estimates by -87.28% in the past 60 days. The Q4 Zacks Consensus EPS Estimate is now just 43 cents per share, reflecting negative growth of -91.5% relative to the year-ago period.

Falling earnings estimates are a huge red flag and need to be respected. Negative growth year-over-year is the type of trend that bears like to see.

Technical Outlook

As illustrated below, MOH stock is in a sustained downtrend. Notice how the stock has made a steady series of lower lows this year, widely underperforming the major indices. Also note that shares are trading below downward-sloping 50-day (blue line) and 200-day (red line) moving averages – another good sign for the bears.

MOH stock has experienced what is known as a “death cross,” whereby the stock’s 50-day moving average crosses below its 200-day moving average. Shares would have to make an outsized move to the upside and show increasing earnings estimate revisions to warrant taking any long positions. The stock has fallen nearly 50% this year alone.

Final Thoughts

A deteriorating fundamental and technical backdrop show that this stock is not set to make its way to new highs anytime soon. The fact that MOH stock is included in one of the worst-performing industry groups adds yet another headwind to a long list of concerns.

A history of earnings misses and falling future earnings estimates will likely serve as a ceiling to any potential rallies, nurturing the stock’s downtrend.

Potential investors may want to give this stock the cold shoulder, or perhaps include it as part of a short or hedge strategy. Bulls will want to steer clear of MOH until the situation shows major signs of improvement.

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This article originally published on Zacks Investment Research (zacks.com).

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