Why Molina Healthcare Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of health insurer Molina Healthcare climbed 10% today after its quarterly profit and outlook topped Wall Street expectations.

So what: The stock has struggled over the past year as high medical costs in Texas and California weighed heavily on results, but today's fourth-quarter profit beat -- EPS of $0.54 versus the consensus of just $0.22 -- coupled with upbeat full-year guidance suggests that those margin pressures are easing. Management even expects to double its annual revenue from $6 billion to $12 billion over the next three years while improving profitability, giving Wall Street plenty of good vibes over its growth prospects as well.

Now what: Molina now sees full-year 2013 EPS of $1.55, ahead of Wall Street's view of $1.53.

"While 2012 was a difficult year, our achievements during the fourth quarter have given us confidence as we look forward to 2013 and beyond," said CEO J. Mario Molina. Of course, with the stock now up about 20% over the past month alone, Fools might want to wait for some of the optimism to fade before buying completely into that bull talk.

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The article Why Molina Healthcare Shares Popped originally appeared on Fool.com.

Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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