UPDATE: Bank of America Color on Molina Healthcare PO Increase

Bank of America, which raised its PO on shares of Molina Healthcare Inc. (NYSE: MOH), is providing some color on the stock.

“Missouri is implementing a rate increase effective July 1, 2011 for its annual reimbursement update, based on our discussions with industry officials,” Bank of America writes. “A 5% boost is worth $0.07 to MOH's 2011 EPS versus guidance of 0% and compliments a +2.7% in the California May revise budget worth an additional $0.05, which could offset any surprises elsewhere.

“Better rates than feared is part of our call for profit margin mean reversion up to a sustainable 2%, which MOH achieved in nine out of the last 12 years. We are revising our 2011 and 2012 stock split adjusted EPS estimates to $1.65 (from $1.60) and $1.97 (from $1.92) on these favorable trends.”

Molina Healthcare closed Thursday a $26.47.