Michael Burry, known for predicting the 2008 housing crisis, bought 125,000 shares of Molina Healthcare, a company that provides managed healthcare services to low-income families. Molina recently slashed its 2025 earnings outlook due to rising medical costs affecting the marketplace business.

Molina Healthcare reported Q3 earnings below expectations, with adjusted earnings of $1.84 per share and premium revenue of $10.8 billion. Medical cost inflation continues to be a challenge, leading the company to lower its full-year earnings guidance to $14 per share from $19 per share.

CEO Zubretsky highlighted rising costs in various healthcare areas driving utilization. Molina’s Medicaid segment remains robust despite challenges, with a 3.2% pretax margin expected. Looking ahead, Molina aims for premium revenue of $46 billion in 2026, driven by new contract wins in Georgia and Texas.

Despite a forecasted decline in adjusted earnings in 2025, Molina’s EPS is expected to grow to $30.73 by 2029, with free cash flow set to increase significantly. MOH stock trades at a discount to its historical valuation, which could lead to substantial gains if it reverts to its average multiple.

Analysts have mixed views on MOH stock, with a range of recommendations from “Strong Buy” to “Strong Sell.” The average price target is $176.93, indicating potential upside from the current price of $148. Investors are advised to conduct further research before making any investment decisions.

Read more at Yahoo Finance: Michael Burry Is Betting on This 1 Under-the-Radar Healthcare Stock. Should You?