Analyst Matt Borsch upgraded
Molina from Market Perform to
Outperform and lifted the price target from $154 to $200,
suggesting roughly 40 percent upside from current levels.
The Thesis
Molina's
2019 annual investor day gave BMO higher confidence in the sustainability of
its turnaround and better visibility on a strong multiyear growth outlook,
Borsch said in the Monday upgrade note. (See his track record here.)
At the
event, Molina emphasized
cost efficiency as the key factor in Medicaid Managed Care, as states are in
the habit of setting prices at the same level for all contracted plans.
This
creates an opportunity for sustainable, strong profit margins and high returns
on investment, the analyst said.
Molina
made a "compelling" case for the retention of current contracts that
present the opportunity to expand with further Medicaid penetration, he
said.
"We
expect near-term validation in the upcoming Texas MMC contract awards where we
think Molina will maintain its six regions and potentially expand to up to
seven more."
The
company said it expects $17 billion to $17.3 billion in revenue
in 2020 and set a three-to-five-year annual growth target of 10-12 percent
for revenue and 12-15 percent for EPS.
BMO
raised its 2020 and 2021 EPS estimates from $12.30 and $13.33, respectively, to
$12.50 and $15, basing the revision on its confidence in sustainability and the
visibility Molina provided on its growth.
The Price Action
Molina
shares were up 3.96 percent at $147.89 at the time of publication Monday.
Related
Links:
Latest Ratings for MOH
|
|
|
|
|
|
|
Date
|
Firm
|
Action
|
From
|
To
|
|
Jun 2019
|
Upgrades
|
Market Perform
|
Outperform
|
|
|
May 2019
|
Upgrades
|
Market Perform
|
Outperform
|
|
|
Apr 2019
|
Maintains
|
Equal-Weight
|
Equal-Weight
|
©
2019 Benzinga.com. Benzinga does not provide investment advice. All rights
reserved.
No comments:
Post a Comment