On Wednesday, TD Cowen reaffirmed its confidence in Molina Healthcare (NYSE:MOH) shares, maintaining a Buy rating on the company's shares. Still, the firm reduced its price target from $412 to $351. The adjustment reflects anticipated increases in Medical Loss Ratios (MLRs) for the second to fourth quarters of the current fiscal year.
The firm's analyst cited the need to modify their model estimates to account for the higher expected MLRs in the upcoming quarters. Elevated Medicaid trend and the mismatch between rates and patient acuity are projected to persist throughout 2024, but the outlook suggests an improvement into 2025.
Despite the near-term challenges anticipated for the stock's performance, TD Cowen indicates a more optimistic view for the following year. The new stock price target of $351 is derived from a blended historical S&P 500 discount, which the firm uses as a basis for its valuation.
Molina Healthcare, a provider of managed healthcare services under the Medicaid and Medicare programs, has been navigating an evolving healthcare landscape. The adjustments in the price target reflect the ongoing changes and challenges within the healthcare sector.
The update from TD Cowen arrives amid a broader context of healthcare companies grappling with rate adjustments and policy changes. While the firm expects Molina Healthcare's stock performance to face headwinds in the near term, the maintained Buy rating suggests a belief in the company's resilience and potential for recovery.
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