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Catalysts
- Membership Growth: MOH has seen a 9% increase in members year over year, reaching approximately 5.7 million members as of March 31, 2024. This growth is driven by new contract wins, acquisitions, and expansion.
- Premium Revenue: Premium revenue for Q1 2024 was approximately $9.5 billion, a 21% YoY increase. The company expects full-year 2024 premium revenue of approximately $38 billion, a 17% increase from 2023.
- Medicare Expansion: Opportunities in the Medicare space are highlighted as a key growth driver.
- Pipeline for M&A and RFPs: MOH has a robust pipeline for mergers and acquisitions (M&A) and Request for Proposals (RFPs).
Risks
- Regulatory Environment: As a managed healthcare provider, MOH is subject to regulatory changes that could impact its operations and profitability.
- Competition: Intense competition in the healthcare industry may affect market share and pricing.
- Medical Costs: Managing medical costs is crucial. Any unexpected surge in costs could impact profitability.
- Redeterminations: Medicaid redeterminations can lead to revenue fluctuations.
Valuation
- Based on historical data, MOH’s trailing P/E ratio is around 16.81, and forward P/E is approximately 13.40.
- Analysts’ 1-year price target averages around $411.55, with a low forecast of $357.54 and a high forecast of $464.10.
Assumptions
Revenue Projection:
- Molina Healthcare’s annual revenue has been on an upward trajectory. In 2023, their revenue reached $34.072 billion, reflecting a 6.56% increase from 2022.
- Considering this trend, we can make an informed estimate for the next five years. However, please note that predicting exact figures is challenging due to various factors (market dynamics, regulatory changes, etc.).
- Assuming continued growth, Molina Healthcare’s revenue could potentially surpass $40 billion by 2027. This projection is based on historical performance and industry trends.
Earnings Projection:
- Conservatively, I’d estimate that Molina Healthcare’s earnings could grow by 5-10% annually over the next five years.
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Disclaimer
The user WallStreetWontons holds no position in NYSE:MOH. Simply Wall St has no position in any of the companies mentioned. The author of this narrative is not affiliated with, nor authorised by Simply Wall St as a sub-authorised representative. This narrative is general in nature and explores scenarios and estimates created by the author. The narrative does not reflect the opinions of Simply Wall St, and the views expressed are the opinion of the author alone, acting on their own behalf. These scenarios are not indicative of the company's future performance and are exploratory in the ideas they cover. The fair value estimates are estimations only, and does not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that the author's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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Based on Analyst Price Targets
Medicaid Expansion And Critical Acquisitions Poised To Boost Long-term Earnings Growth
Key Takeaways Recent contract wins and Medicaid expansions are expected to boost premium revenue and improve earnings. Planned acquisition and efficiency improvements will enhance market share and long-term earnings growth.
View narrativeUS$370.78
FV
20.6% undervalued intrinsic discount10.46%
Revenue growth p.a.
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4 days ago author updated this narrative
