Why is the Medibank share price struggling to gain ground in May?

We check what’s going on with shares in the private health insurer.

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Key points

  • The Medibank share price has moved in circles since the beginning of May
  • Weak market sentiment and volatility have dragged down the company's shares
  • Medibank reaffirmed its FY22 outlook at the Macquarie Australia Conference

The Medibank Private Ltd (ASX: MPL) share price has failed to make a move in the past three weeks.

Despite the company delivering a positive update at the Macquarie Australia Conference earlier this month, Medibank shares are travelling sideways.

For the recent period, Medibank shares are fetching just one cent more than they did at market close on 29 April.

Today, the private health insurance company’s shares closed at $3.21, down 0.93% for the day.

What’s happened to the Medibank share price in May?

Amid recent broader market weakness, the Medibank share price has been weighed down regardless of the company reaffirming its FY22 outlook.

Management noted in its latest presentation that private health insurance participation growth remains strong. This is due to more people continuing to prioritise their health and wellbeing, the company said.

Notably, Medibank Private has recorded six consecutive quarters of industry policyholder growth.

New-to-industry and younger groups are becoming major contributors to growth which are positive signs for industry sustainability.

Medibank stated it’s on track to achieve 3.1% to 3.3% of policyholder growth in FY22.

Furthermore, the underlying average net claims expense per policy unit is forecast to be around 2.3% among resident policyholders.

The company advised it will deliver $15 million in productivity savings. In total, management expenses are predicted to come in at roughly $530 million for the full year.

Is this a buying opportunity?

One broker weighed in on the Medibank share price at the start of this month.

The team at Macquarie cut its 12-month price target by 1.5 % to $3.20 for Medibank shares.

It appears analysts have a similar view to investors’ perceived value of the company’s shares.

Looking further back, Citi has the most bullish outlook for the private health insurer’s shares, upgrading them to a buy.

The broker also raised its rating by 4.3% to $3.65 per share following the company’s half year results.

Based on today’s price, this implies a potential upside of around 13.7%.

Motley Fool contributor Aaron Teboneras 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 Scott Phillips.

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