Magellan Health Inc (NASDAQ:MGLN), a healthcare company based in United States, saw a decent share price growth in the teens level on the NasdaqGS over the last few months. As a well-established company, which tends to be well-covered by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s examine Magellan Health’s valuation and outlook in more detail to determine if there’s still a bargain opportunity. Check out our latest analysis for Magellan Health
What’s the opportunity in Magellan Health?
According to my valuation model, the stock is currently overvalued by about 39%, trading at US$96.95 compared to my intrinsic value of $69.73. This means that the opportunity to buy Magellan Health at a good price has disappeared! Another thing to keep in mind is that Magellan Health’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.
What kind of growth will Magellan Health generate?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. With profit expected to grow by 53.83% over the next couple of years, the future seems bright for Magellan Health. It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? MGLN’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe MGLN should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on MGLN for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for MGLN, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.