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Earnings Beat: Molina Healthcare, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

Molina Healthcare, Inc. (NYSE:MOH) defied analyst predictions to release its quarterly results, which were ahead of market expectations. It was overall a positive result, with revenues beating expectations by 4.1% to hit US$5.0b. Molina Healthcare also reported a statutory profit of US$3.10, which was an impressive 49% above what the analysts had forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Molina Healthcare

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Following the latest results, Molina Healthcare's eight analysts are now forecasting revenues of US$22.4b in 2021. This would be a substantial 25% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to reduce 2.3% to US$13.42 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$22.4b and earnings per share (EPS) of US$13.36 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

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It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$214. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Molina Healthcare analyst has a price target of US$255 per share, while the most pessimistic values it at US$149. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Molina Healthcare's rate of growth is expected to accelerate meaningfully, with the forecast 25% revenue growth noticeably faster than its historical growth of 3.1%p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 6.8% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Molina Healthcare is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Molina Healthcare going out to 2024, and you can see them free on our platform here.

You still need to take note of risks, for example - Molina Healthcare has 2 warning signs we think you should be aware of.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.