Here's Why MOH Shares Are Attracting Prudent Investors Now

Molina Healthcare, Inc. MOH is a multi-state managed care organization that provides managed healthcare services under the Medicaid and Medicare programs and through the state insurance marketplaces. The company operates in three segments: Medicaid, Medicare and Marketplace. MOH stock has risen 1.5% in the year-to-date period against the industry’s average decline of 28.4%.

Headquartered in Long Beach, CA, MOH holds a market capitalization of $16 billion. The company offers health insurance plans sponsored by the government for individuals and families. It focuses on delivering affordable and comprehensive coverage, especially for lower-income people. Its trailing 12-month P/E ratio of 12.84X is higher than the industry average of 10.79X, indicating growing investor confidence.

Courtesy of solid prospects, MOH currently carries a Zacks Rank #2 (Buy).

Where Do Estimates for MOH Stand?

The Zacks Consensus Estimate for Molina Healthcare’s 2025 earnings is pegged at $24.44 per share, indicating a 7.9% year-over-year rise. In the past 60 days, it has witnessed two upward estimate revisions against none in the opposite direction. Furthermore, the consensus mark for revenues is pegged at $44.1 billion for 2025. It beat earnings estimates in three of the past four quarters and missed once.

Molina Healthcare, Inc Price and EPS Surprise

Molina Healthcare, Inc price-eps-surprise | Molina Healthcare, Inc Quote

MOH’s Growth Drivers

Molina Healthcare continues to drive growth through strategic acquisitions. Premium revenues have experienced significant growth, driven by rate hikes, new Medicaid contract wins and expanding geographic footprints. In the first quarter of 2025, premium revenues rose 11.8% year over year to $10.6 billion. The company projects premium revenues to increase 9% year over year in 2025, which is likely to be around $42 billion.

As of March 31, 2025, total membership improved 0.4% year over year to around 5.8 million. The health insurer witnessed year-over-year increases in customers within its Medicare and Marketplace businesses. MOH expects total membership to be around 5.9 million in 2025, 7.3% higher than the 2024-end figure.

The company’s affordable health plans, which offer comprehensive benefits, have secured key contract wins. In 2025, Molina Healthcare was awarded a new contract to provide a Fully Integrated Dual Eligible Special Needs Plan (D-SNP) in Illinois through its subsidiary. This contract, awarded by the Illinois Department of Healthcare and Family Services, positions the company for strategic growth while enhancing its service offerings for dual-eligible beneficiaries.

MOH’s return on equity is 28.4%, better than the industry average of 24%. The metric reflects the company's effectiveness in utilizing its shareholders' money compared with its industry peers, which impresses investors. MOH's balance sheet strength provides financial flexibility. Its cash and cash equivalents of $4.9 billion at the first-quarter end were much higher than the long-term debt of $3.6 billion.

Risks

There are some factors, however, that investors should keep a careful eye on.

The company’s operating expenses have escalated over the last several years due to increasing medical care costs and general and administrative expenses. Total operating costs increased 5.5%, 19.8% and 12.7% year over year in 2023, 2024 and the first quarter of 2025, respectively. Higher expenses can put pressure on the company’s margins in the days ahead.

Molina Healthcare's medical care ratio (MCR) continues to be on the rise. A higher MCR indicates a lower proportion of remaining premiums after the payment of insurance claims. In the first quarter of 2025, the MCR deteriorated 70 basis points from the year-ago period.

Other Key Picks

Some other top-ranked stocks in the Medical space are Clover Health Investments Corp CLOV, Encompass Health Corporation EHC and Integer Holdings Corporation ITGR, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Clover Health Investments’ current-year earnings of 11 cents per share has witnessed one upward revision in the past 60 days against no movement in the opposite direction. Clover Health Investments beat earnings estimates in each of the trailing four quarters, with the average surprise being 114.6%. The consensus estimate for current-year revenues is pegged at $1.9 billion, suggesting 37.7% year-over-year growth.

The Zacks Consensus Estimate for Encompass Health’s current-year earnings of $5.01 per share has witnessed eight upward revisions in the past 60 days against no movement in the opposite direction. Encompass Health beat earnings estimates in each of the trailing four quarters, with the average surprise being 12.3%. The consensus estimate for current-year revenues is pegged at $5.9 billion, suggesting 9.5% year-over-year growth.

The Zacks Consensus Estimate for Integer Holdings’ current-year earnings of $6.33 per share has witnessed five upward revisions in the past 60 days against no movement in the opposite direction. Integer Holdings beat earnings estimates in three of the trailing four quarters and missed once, with the average surprise being 2.8%. The consensus estimate for current-year revenues is pegged at $1.9 billion, suggesting 7.7% year-over-year growth.

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

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