Molina Shares Gain Despite Tepid Outlook

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Shares in Molina Healthcare Inc. surged early Wednesday after the company reported strong first quarter earnings. However, the company cut its 2008 outlook due to declining interest rates and the anticipation of higher taxes.


Molina reported first-quarter net income of $13.2 million (46 cents per share), a 38 percent hike from $9.6 million (34 cents) in the same period a year earlier beating Wall Street’s expectations of 45 cents per share, according to Reuters Estimates.


Revenue for the Long Beach-based health care provider rose 31 percent to $737 million also eclipsing analysts’ predictions of $709 million.


For the full year, Molina said it expects profit in the range of $2.10 to $2.40 per share, compared with its prior view of $2.25 to $2.45 per share. Wall Street is hoping for $2.16 per share.


Molina said that its lowered outlook assumes that the Federal Reserve will implement two more rate cuts, and it expects premium rate decreases in California as well as higher state taxes in Michigan.


Shares in Molina were up more than 11 percent to $26.21 in early trading Wednesday.

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