Jefferies analyst David Windley upgraded Molina Healthcare to Buy from Hold and raised his price target for the shares to $169 from $152. Despite raising earnings guidance, concern about earnings sustainability has pulled the stock down 14% from recent highs, Windley tells investors in a research note. The analyst says that while Healthcare Exchange margin pressure and reduced revenue in Florida and New Mexico are risks, Molina's cost initiatives plus organic growth "will more than offset headwinds." He views the stock's valuation as attractive at current share levels and has increased coincidence in the company's earnings stability.

The company states: "The consolidated MCR for the first quarter of 2024 was 88.5%, reflecting changes in member mix due to growth across all segments and continued, strong medical cost management, and is in line with the Company's expectation. The Medicaid MCR for the first quarter of 2024 was 89.7%, in line with the Company's expectation and normal quarter to quarter trend fluctuations within our guidance. The new store additions in California and Nebraska, as well as Iowa and the My Choice Wisconsin acquisition in late-2023, drove a higher reported MCR in the first quarter of 2024. The Medicare MCR for the first quarter of 2024 was 88.7%, in line with the Company's expectations. Utilization in the legacy portfolio was consistent with the second half of 2023, but was offset by operational improvements and benefit adjustments."

Reports Q1 revenue $9.93B, consensus $9.44B. "We are very pleased with our first quarter performance," said Joseph Zubretsky, CEO. "We delivered strong financial performance supported by excellent operating metrics across our business, while sustaining profitable growth consistent with our long-term targets."

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