Molina Healthcare (MOH) Plunges 3.57% on Elevated Medical Costs

Molina Healthcare (MOH) shares fell 3.57% today, marking the third consecutive day of decline, with a total drop of 18.34% over the past three days. The stock price hit its lowest level since September 2020, experiencing an intraday decline of 4.36%.

The strategy of buying MOH shares after they reached a recent low and holding for one week resulted in a significant underperformance compared to the benchmark. Over the past five years, the strategy yielded a return of -36.45%, while the benchmark returned 58.96%. The strategy had a maximum drawdown of 0.00%, indicating that it did not experience any further declines after the initial low, but it still underperformed the benchmark by a wide margin. The Sharpe ratio of -0.48 and a volatility of 34.23% suggest that the strategy carried considerable risk, although the lack of additional drawdowns after the initial low may have been due to market conditions rather than any inherent flaws in the strategy.

TD Cowen recently lowered its price target for Molina Healthcare to $283 from $369, citing elevated medical costs. This adjustment came after Molina pre-announced its second-quarter 2025 earnings, which revealed higher-than-expected medical utilization across all business lines. This trend is anticipated to persist throughout the year, prompting TD Cowen to reduce its full-year 2025 EPS forecast for Molina to $21.68 from $24.45. Additionally, the firm raised its estimate for Molina's consolidated medical loss ratio (MLR) to 89.5%.

Other analysts, including UBS and Barclays, have also revised their price targets downward due to the ongoing cost pressures. These adjustments reflect the broader concerns about the financial health of Molina Healthcare, as the company grapples with increasing medical expenses and utilization rates. The collective downgrades by major analysts have contributed to the recent decline in Molina's stock price, as investors reassess the company's prospects in light of these challenges.