Molina Healthcare is the IBD Stock Of The Day after closing a $110 million acquisition. Now, MOH stock is working on a seven-week flat base.
Molina provides health insurance through government programs like Medicare and Medicaid. The company just wrapped its takeover of AgeWell New York and is in the process of buying My Choice Wisconsin. Both are Medicaid management services. Molina expects the duo to add nearly $2 billion in acquired revenue, beginning next year.
The company expects the two acquisitions to drive 10% growth over its current 2022 prediction. For the year, Molina expects $30 billion in sales and adjusted earnings of at least $17.60 a share.
MOH Stock At A High Point
According to FactSet, MOH stock is only about 2% off its 52-week high. Shares gained a fraction Monday to close at 350.45.
The stock is forming a flat base with a buy point at 361.35, MarketSmith.com shows. There's a potential early entry at 357.24. The relative strength line is at new highs, a positive sign. But with the market status currently "In Correction," investors should wait for a follow-through day and confirmed uptrend before making any purchases.
Still, analysts remain bullish on Molina stock. FactSet shows 18 analysts have an overweight rating on shares. On average, they expect the company to earn $4.20 per share on $7.82 billion in third-quarter sales. Both measures would surge vs. year-ago numbers. On a year-over-year basis, earnings would jump more than 48% as sales rise 11%.
That would put MOH stock partially in line with CAN SLIM suggestions for savvy investors. Those guidelines suggest investors look for companies whose earnings and sales have grown 20%-25% during recent quarters.
Increased Membership, Premiums
Molina earnings are reaping the benefits from increased membership.
During the June quarter, revenue from members' insurance premiums increased 18% over the same previous-year period, to $7.8 billion. Molina had 5.1 million members, an increase of 9% over the same time last year.
MOH stock has climbed more than 14% since its second-quarter report.
Today, shares have a strong Relative Strength Rating of 95. This puts them in the leading 5% of all stocks in terms of 12-month performance, according to IBD Digital. The stock's relative strength line is also at a new high.
Bullishly, MOH stock also has a nearly perfect Composite Rating of 97. This means its fundamental and technical measures rank in the top 3% of all stocks.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
