Wells Fargo has moved Molina Healthcare (MOH) from an Overweight rating to Equal Weight and reduced its 12-month price target to $141 from $208. Analyst Stephen Baxter pointed to the insurer's weak fourth-quarter 2025 performance and mounting concern over the variability of revenue and expense accruals as primary drivers of the change.
The firm said Molina has materially lowered its outlook for fiscal 2026 earnings, cutting expected results from roughly $14 per share to a figure just above $5 per share. That revised outlook includes an estimated $1.50 per share of incremental start-up impact. The updated projection is consistent with consensus estimates that put 2026 EPS at $4.99, and the stock is trading at a price-to-earnings multiple of 16.47.
Wells Fargo also highlighted that nine analysts have revised their earnings estimates downward for the upcoming period, based on InvestingPro data, which it cited in support of a more cautious stance toward the name.
In its note, Wells Fargo said it was hard to characterize the company's guidance as conservative given Molina's assumption that Medicaid cost trends will moderate significantly in 2026. The firm emphasized that it had previously expected Molina to outperform peers even if Medicaid work requirements created pressure in 2027, but the recent results and guidance have eroded that confidence.
The analyst contrasted Molina's outlook with that of competitors, noting the market is willing to place a 13-14x multiple on Centene's 2026 earnings. Wells Fargo indicated it views Centene's guidance as more reliable than Molina's. Applying a 13.5x multiple to $7.50 in earnings, Wells Fargo said, could support an argument for downside toward $100 for Molina shares.
Wells Fargo characterized the downgrade as a reflection of diminished conviction that Molina can sustain positive Medicaid earnings while addressing the operational challenges that emerged in the quarter. At the same time, InvestingPro analysis referenced by the firm suggested the stock may be undervalued at current market levels, and a full Pro Research Report is available for investors seeking additional detail on MOH and other US equities.
Operational and accounting developments from Molina's own reports contributed to the analyst reaction. The company posted a significant earnings surprise on the downside for fourth-quarter 2025, reporting an adjusted loss per share of $2.75 versus consensus expectations for earnings of $0.34. Revenue, however, topped forecasts, coming in at $11.38 billion.
Molina also disclosed it will take a non-cash, pre-tax impairment charge of approximately $93 million in the first quarter of 2026. The impairment is associated with the company's decision to exit the Medicare Advantage Prescription Drug product for 2027, and Molina said it will refocus its Medicare strategy on members eligible for both Medicare and Medicaid (dual eligible) going forward.
Other broker-dealer reactions have been largely cautious. Truist Securities left its rating at Hold, citing a fiscal 2026 guidance package that fell well short of expectations. Cantor Fitzgerald trimmed its price target to $144 from $180, pointing to concerns about the assumptions embedded in Molina's 2026 projections. Jefferies reduced its target to $139 from $160 and flagged issues with the Medicaid medical loss ratio in the fourth quarter of 2026 as a driver of its view.
Taken together, the analyst moves underscore a wary tone among equity analysts following Molina's latest reporting and forward guidance. The primary issues for investors center on the reliability of accrual estimates, the trajectory of Medicaid cost trends in 2026, and the company's ability to execute a narrowed Medicare strategy while stabilizing margins.