Shares in Medibank Private Ltd (ASX: MPL) finished trading yesterday at $3.06 apiece.
The gain comes amid a period of heavy losses for the company whose share price has collapsed from a high of $3.60 on January 2.
What's up with the Medibank share price?
Shares have been gliding down these past few weeks with authority. This is despite nothing sensitive from the company.
Noteworthy are the natural flooding disasters spread along the East Coast of Australia that are no doubt causing headaches for Australian insurers and insurees alike.
Fellow insurers Suncorp Group Ltd (ASX: SUN) and Insurance Australia Group Ltd (ASX: IAG) also felt pain from the fallout.
As such, it appears the market has priced in lower growth expectations for Medibank over the coming periods, according to Matt Ingram, analyst at Bloomberg.
"[Medibank's] cyclically adjusted P/E ratio lags behind peers despite being 20% above the past decade's average and could be due to the market's lower growth expectations for Medibank," he wrote in a recent note.
"Its 4.3% dividend yield is comparable to peers, but may not be boosted by more buybacks like Suncorp and Australia's big four banks due to lower surplus capital," he added.
The market prices securities on a balance of earnings performance and in particular, future earnings expectations, Peter Lynch says in One Up on Wall Street.
So if the market feels Medibank's growth is set to wind back, so will its share price on this logic.
In the last 12 months, the Medibank share price has climbed 21% but has erased around 8% of gains since trading resumed this year.
