Sell Rating for Molina Healthcare Amid Earnings Miss and Medicaid Funding Uncertainty

Bank of America Securities analyst Joanna Gajuk reiterated a Sell rating on Molina Healthcare yesterday and set a price target of $248.00.

Joanna Gajuk has given her Sell rating due to a combination of factors impacting Molina Healthcare’s financial outlook. The company reported a significant miss in its second-quarter earnings, falling short by 10% and subsequently reducing its guidance for 2025 by the same margin. This adjustment is attributed to a persistent high-cost trend across its business segments, including Medicaid, exchanges, and Medicare Advantage.
Moreover, the uncertainty surrounding Medicaid funding, particularly in light of anticipated federal funding cuts, adds to the challenges Molina Healthcare faces. The company’s heavy reliance on Medicaid, which constitutes 75% of its premiums, makes it particularly vulnerable to these changes. Despite the company’s belief that these issues are temporary, the ongoing high trend in costs and the difficulty in pricing exchanges contribute to the decision to maintain a Sell rating.

Based on the recent corporate insider activity of 66 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of MOH in relation to earlier this year.