Is Molina Healthcare (MOH) a Rebound Buy After a 27% Selloff?

Molina Healthcare (MOH) has endured a punishing 2025, with its shares plummeting over 50% year-to-date amid a perfect storm of Medicaid enrollment declines, surging medical costs, and legal scrutiny. The recent 27% selloff has sparked debate among investors: Is this a value trap, or a mispriced opportunity? To answer, we must dissect MOH through the dual lenses of value investing and technical-reversal analysis, weighing intrinsic worth against market sentiment and chart patterns.

Value Investing: A Tale of Contradictions

At first glance, MOH appears undervalued. Intrinsic value estimates peg its fair value at $357.06, implying a 58% discount to its current price of $137.54. This premium is underpinned by bullish revenue forecasts-$50.7 billion by 2028, requiring a 6.8% annual growth rate. However, these projections hinge on MOH's ability to stabilize Medicaid enrollment and curb medical cost inflation, both of which have eroded margins.

The price-to-book (P/B) ratio of 1.67, a 39% drop from its 12-month average of 2.75, suggests the market has discounted tangible assets. Yet, this metric alone is insufficient without context. MOH's debt-to-equity ratio of 0.92 is manageable but not conservative, and its earnings growth has collapsed: GAAP EPS fell 73% year-over-year in Q3 2025, with full-year guidance slashed to $14.00 per share.

Institutional confidence offers a counterpoint. Cobalt Capital's $22 million investment, allocating 10.11% of its 13F assets to MOH, hints at long-term conviction. Yet, this bet assumes MOH can navigate Medicaid funding uncertainties and operational headwinds-a tall order for a company that has consistently missed earnings estimates.

Technical Reversal: A Market at a Crossroads

Technically, MOH is in a precarious position. The 14-day RSI of 42.69 signals neutrality, but the MACD of -6.04 and the stock's position below key moving averages (20-day EMA at $147.97, 200-day EMA at $230.18) lean bearish. However, oversold conditions-weekly RSI at 11.1 and daily RSI at 22.7 suggest a potential rebound could be near.

Chart patterns add nuance. A cup and handle formation, with resistance at $151, implies a breakout scenario if volume surges. The stochastic oscillator's %K at 12.16% and a pivot bottom on November 20 further hint at short-term buying interest. Yet, the broader trend remains bearish: the stock is projected to fall 24.31% over three months, with support at $145.88 and resistance at $156.93.

Volume trends are mixed. While the last trading day saw a 0.669% price rise alongside increased volume, the VWAP remains below the current price, signaling negative momentum. This duality-short-term optimism vs. long-term pessimism-reflects a market in flux.

Risks and Realities

Medicaid enrollment has dropped 5.2% in 2025's first nine months, compounding pressure on revenue. Rising medical costs and potential federal funding cuts could further erode margins. Legal challenges, including disputes over financial disclosures, add regulatory risk.

Conversely, MOH's low P/B ratio and institutional backing suggest the market may have overcorrected. A rebound would require not just margin stabilization but a reversal of enrollment trends-a high bar.

Conclusion: A High-Risk, High-Reward Proposition

For value investors, MOH's intrinsic value premium is tempting, but its operational fragility demands caution. The stock's technical profile is equally ambiguous: oversold indicators and pattern formations suggest a potential bounce, yet bearish momentum indicators and volume trends warn of further declines.

A rebound buy would require a precise alignment of factors: Medicaid enrollment stabilization, cost containment, and a breakout above $151. Until then, MOH remains a speculative bet-a stock where the margin of safety is thin, and the margin of error is wide. Investors must weigh their risk tolerance against the possibility of a prolonged bearish trend.