What Happened?

Shares of healthcare insurance company Molina Healthcare (NYSE:MOH) fell 6.7% in the morning session after the company reported weak first-quarter 2025 results, missing analysts' expectations on EBITDA despite beating on revenue, EPS, and membership growth. Medical costs ticked up as expected, and EBITDA performance was softer than anticipated. The medical care ratio rose to 89.2%, as higher utilization in long-term care and behavioral health pushed costs above forecast, especially in the Medicaid and Marketplace segments. Overall, the results disappointed.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Molina Healthcare? Access our full analysis report here, it’s free.

What The Market Is Telling Us

Molina Healthcare’s shares are somewhat volatile and have had 14 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 3 days ago when the stock dropped 5.3% on the news that President Trump criticized the Federal Reserve's approach to interest rate cuts, warning that the pace was slow and could hinder economic growth. Trump's comments added pressure to an already sensitive market, raising concerns about political interference in monetary policy. 

Meanwhile, Fed Chair Jerome Powell maintained a cautious stance the previous week, highlighting the difficulty of balancing the dual mandate of steady employment and price stability amid the escalating trade tension. Investor sentiment was further dampened by the absence of constructive progress in trade negotiations, especially US-China relations which took a turn for the worse in the previous week. 

Overall, the outlook seemed more unclear heading into the first quarter 2025 earnings season, as a combination of hard to predict monetary policy and unresolved trade tensions weighed on business confidence.

Molina Healthcare is up 9.2% since the beginning of the year, but at $313.71 per share, it is still trading 14.6% below its 52-week high of $367.41 from April 2024. Investors who bought $1,000 worth of Molina Healthcare’s shares 5 years ago would now be looking at an investment worth $1,864.

Unless you’ve been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) semiconductor stock benefiting from the rise of AI. Click here to access our free report on our favorite semiconductor growth story.