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Ahead of the Bell: Analyst upgrades Molina shares

A Susquehanna Financial Group analyst upgraded Molina Healthcare Inc. on Friday, citing the possibility of new business over the next year and the insurer's potential for long-term growth.

Molina, which is based in Long Beach, Calif., focuses on government-funded coverage. Analyst Chris Rigg said shares could double over the next 18 months if Molina wins new business in Florida and New Mexico and results improve in Texas. The company had withdrawn its profit guidance for the year in June because of its expansion into Texas, which was costlier than it had predicted.

Shares closed Thursday at $23.84 and are up 6.8 percent in 2012.

Over the longer term, he noted that Molina estimates that its revenue could double to $12 billion by 2015 due in part to coverage expansions called for in the health care overhaul.

Molina also expects to benefit from a category of patients who are eligible for both Medicaid, the state and federally funded program that covers the poor and disabled people, and Medicare, which focuses on the elderly and the disabled.

States are starting to move these so-called "dual eligible" residents, who generally have expensive medical conditions, into managed care programs that coordinate care and cut wasteful spending.

Rigg upgraded his rating on Molina shares to "positive" from "neutral" and raised a 12-month price target on the stock to $30 from $22.

The company met with analysts and investors on Wednesday in New York.

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