Why has the Medibank (ASX:MPL) share price leapt 8% in November so far?

Medibank shares have risen this month. What’s going on?

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The Medibank Private Limited (ASX: MPL) share price has gone up by 8% in this month alone. What could be impacting the sentiment about the private health insurer?

Medibank shares have been somewhat variable in recent months. It has gone up by 16% over the last six months and 8% this month. But it’s only back to where it was during September 2021.

Just last week, the company held its annual general meeting (AGM) and gave a presentation.

Medibank AGM update

The company reminded investors that COVID has put health at the top of the community’s mind. In FY21, it experienced “solid financial performance”, “strong policyholder growth, an increase in market share and record customer advocacy.”

It saw health insurance operating profit growth of 14.4%, with Medibank Health segment profit rising by 12.9%. This helped overall group net profit after tax increasing 39.8% to $441.2 million. That included investment income being $117 million above last year.

Medibank said that it’s focused on scaling and expanding its preventative health programs. It invested in Myhealth Medical Group of GP clinics this year, to support expanding the footprint and transforming the approach to providing preventative healthcare for patients.

In the longer-term, its focus on preventative health will be “key” to help ensure the overall sustainability of the health system.

FY22 and outlook comments

The outlook can have impacts on the Medibank share price.

Medibank said that it remains committed to returning any permanent net claims savings due to COVID back to customers and it expects to confirm its next wave of customer support before the “end of the year”.

One comment that investors may be focusing on is that Medibank has seen “strong policyholder growth” continue in the first four months of FY22, with another 21,000 policyholders added.

Medibank said it expects industry participation growth will be slower in FY22 compared to FY21, so it’s now aiming to achieve growth of at least 3%, including growth in the Medibank brand.

Taking into account the recent COVID lockdowns in Victoria and NSW, on an underlying basis, it’s expecting average net claims per policy unit to be in line with the second half of FY21, or 2.4% among resident policyholders.

The business also believes that it can cut $15 million of health insurance management expenses to improve productivity in FY22. It’s also targeting “inorganic” growth for Medibank Health and health insurance.

Is the Medibank share price a buy now?

Some brokers think so, though the price target doesn’t leave a lot of gains on the table.

The broker Morgan Stanley currently thinks that Medibank shares are a buy with a price target of $3.80 – that’s a potential upside of around 5% over the next 12 months.

There are several brokers that rate Medibank as a hold, such as Ord Minnett, which has a price target of $3.30.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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