UPDATE: Credit Suisse Starts Molina Healthcare (MOH) at Outperform
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Credit Suisse analyst A.J. Rice initiates coverage on Molina Healthcare (NYSE: MOH) with a Outperform rating and a price target of $260.00.
The analyst comments "Transitory 2021 Headwinds Mask Higher Earnings Power Next Year and Beyond: MOH’s 2021 EPS outlook of $12.50-13.00 includes two challenges temporarily pressuring earnings: (1) the net effect of the COVID-19 pandemic (consisting of utilization curtailment and direct cost of care, offset by risk-sharing corridors), which represents a $1.50 EPS headwind; and (2) its temporary Medicare risk score shortfall, which represents a $1.00 EPS headwind to earnings. These two impacts represent a 20% EPS headwind in 2021. Additionally, once MOH obtains its targeted margins on MCC and once Affinity is closed and synergized, MOH expects to achieve an additional EPS tailwind of at least $1.50. Thus, MOH’s pro forma run rate after the natural relaxation of temporary constraints would produce an after-tax margin of approximately 4% (in-line with its recent performance)."
Shares of Molina Healthcare closed at $233.28 yesterday.
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Related EntitiesCredit Suisse, Earnings, A.J. Rice
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