MOH: Florida Contract Win Will Drive Medicaid Earnings Opportunity Into 2025

Molina Healthcare’s analyst price target has declined from approximately $179 to $173 per share. Analysts cite persistent medical cost pressures and cautious outlooks on Medicaid margins as key drivers behind the recalibration.

Analyst Commentary

Recent Street research on Molina Healthcare reveals a mixed landscape of expectations regarding the company’s future valuation, growth, and Medicaid execution. Analyst opinions oscillate between cautious and constructive, with perspectives shaped by shifting earnings forecasts, sector outlook, and Molina’s position within several government-sponsored health programs.

Bullish Takeaways

• Bullish analysts highlight recent program awards, including a children’s medical services contract in Florida. This is seen as a potential earnings tailwind and an opportunity to enhance Molina’s Medicaid footprint.
• The company’s long-term positioning in the healthcare sector is considered favorable. Solid free cash flows and financial flexibility are viewed as supporting opportunities for further growth and potential mergers or acquisitions.
• Improved regulatory visibility and enhanced subsidies are expected to provide longer-term support to Molina’s business model and stabilize margins.
• There is confidence among some that core demand drivers for managed care remain strong, supporting continued investment and sector outperformance over time.

Bearish Takeaways

• Bearish analysts are recalibrating price targets in response to ongoing medical cost pressures, persistent Medicaid margin uncertainty, and continued earnings guidance cuts.
• Concerns are rising over program visibility as state budgets tighten and Medicaid enrollment shifts. These dynamics are seen as challenging the achievability of management’s margin targets for 2026.
• Some view Molina’s FY26 earnings outlook as overly optimistic, noting underevaluated risks in Medicaid exposure and uncertainty around medical loss ratios.
• The managed care sector is considered to be facing its most significant underwriting downturn in over a decade, with pressure expected to persist due to redetermination cycles and budget deficits at the state level.

What's in the News

• Affordable Care Act plan enrollees, including those with Molina Healthcare, are facing an average 26% premium increase for 2026, as the Centers for Medicare and Medicaid Services recently released new rates (The Wall Street Journal).
• Enhanced subsidies for ACA health insurance plans are at the center of government shutdown negotiations. The outcome will impact more than 22 million subsidized enrollees, including many Molina members (The Wall Street Journal).
• Molina Healthcare has been awarded a contract by the Florida Agency for Health Care Administration to serve approximately 120,000 Children's Medical Services enrollees, with an anticipated total premium of about $5 billion in 2025.
• The company is actively pursuing acquisitions and highlights a pipeline of $54 billion in new opportunities over the next few years, while remaining strategically focused on Medicaid revenue growth.

Valuation Changes

• Fair Value Estimate has declined from $178.80 to $172.53, reflecting a reduced outlook.
• Discount Rate has risen slightly from 6.78% to 6.96%, suggesting a marginal increase in perceived risk or market return expectations.
• Revenue Growth Forecast has decreased from 6.10% to 5.24%, signaling lowered growth projections.
• Net Profit Margin expectation has edged up slightly from 2.38% to 2.42%.
• Future P/E Ratio forecast has dipped modestly from 7.34x to 7.17x, indicating a slight reduction in expected earnings multiples.