The Medibank Private Ltd (ASX: MPL) share price has gone down heavily over the past month – it's down 20%.
Investors have punished the business after it was revealed that the company had been hacked, with millions of customers' data being accessed.
According to Medibank, the cybercriminal has accessed the name, date of birth, address, phone number and email address of around 9.7 million current and former customers and some of their authorised representatives. This figure represents around 5.1 million Medibank customers, around 2.8 million AHM customers and around 1.8 million international customers.
Medibank decided not to pay a ransom, because that could encourage more cyber attacks. Further, it may not have done anything to protect customers or their data.
Customer data starts being published
The private health insurer confirmed that the cybercriminal is releasing files onto a dark web forum containing customer data.
According to reporting by The Age, Medibank customer data may be migrating into more "publicly available" places.
A Medibank Private spokesperson said:
The Australian Federal Police are aware of data on new sites and will be addressing it.
The Australian Federal Police have said they will take swift action against anyone attempting to benefit, exploit or commit criminal offences using stolen Medibank customer data.
We continue to work closely with the Australian Federal Police who are focused, as part of Operation Guardian, on preventing the criminal misuse of this data.
Is the Medibank share price an opportunity?
A key question is – will the economic damage to Medibank be more or less than 20% of its long-term value?
I'm not sure that it will. The broker Ord Minnett agrees, it thinks the main problem could be damage to the reputation of the business. However, its growth may be hurt and some policyholders may leave.
Ord Minnett rates the business as accumulate, with a price target of $3.20. That implies a possible rise of more than 10%. It could also pay a grossed-up dividend yield of 7% in FY23.
The broker Citi rates Medibank as neutral, noting that the private health insurer withdrew its policyholder growth for FY23. The broker also reduced its policyholder growth expectations for the medium-term.
Credit Suisse, another broker, rates Medibank Private as outperform, with expectations of higher costs and damage to Medibank's brand.
My view on the opportunity
The Medibank share price has fallen a lot. At this stage it's hard to say how this will affect the potential growth rate of the business.
I don't think it will 'bounce' back quickly unless the business is able to say that it hasn't lost many policyholders and that growth hasn't really been affected.
Using Ord Minnett's numbers, Medibank is valued at 17x FY23's estimated earnings and 15x FY24's estimated earnings.
I wouldn't say it looks like a cheap buy, but it definitely looks cheaper than it was before. In the meantime, investors can receive a decent dividend yield until this event (hopefully) fades into history for policyholders and the company alike.
