Molina's stock, up over 22% year-to-date, has "come too far too fast," Stifel analyst Thomas Carroll noted.
The Long Beach, CA-based firm's current valuation "under-appreciates" the considerable lift required to expand margins, near-term rebid risks to revenues and overstates the probability of a near-term takeout, he added.
Carroll foresees that the company will realize notable earnings power, but questions the pace that it can achieve the margins.
He suggests that current investors take profits and interested investors "do their homework" and wait for a better opportunity.
Shares of Molina opened lower over 1% on Wednesday.
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