UPDATE: Credit Suisse Assumes Coverage on Molina Healthcare

In a report published Thursday, Credit Suisse analyst Chris Carter assumed coverage on Molina Healthcare (NYSE: MOH) with a Neutral rating, raising its price target to $42.00 from $37.00

According to the report, MOH is a multistate MCO focused on government end markets. The analysts fully expect MOH to capture its fair share of a significant industry-wide market opportunity of an estimated ~$500B+ across unmanaged Medicaid, duals and exchanges.

“We believe MOH will be a net beneficiary of a secular trend toward privatization of gov't-managed health care,” the report noted. “As such, we model meaningful revenue growth in 2014-15 of +47% and +23% y/y, respectively. We also view MOH's agreement with California offering downside margin protection on state gov't business as a positive and believe take-out potential provides some level of valuation support.”

Some risks from the report included high revenue growth and 2015 revenue projections may prove too high, particularly around expectations for exchanges.

MOH closed Wednesday at $37.40 with shares trading down at 1.55 percent.