Investment expert shares forecast on Medibank share price

The share price of Medibank, one of Australia’s top 10 private health insurance (PHI) providers in 2022, has been volatile in recent months, leading experts to weigh in on the insurer’s current state and what the future brings.

Tristan Harrison, a contributor at private financial and investing advice company The Motley Fool, noted a 3.5% rise in Medibank’s share price this year. However, the insurer’s share price has tumbled by 5.6% since August 30, 2022.

On the bright side, Harrison expects Medibank to recover in the 2023 financial year (FY23), thanks to growth within the business. He forecasts a 2.7% rise in the insurer’s policyholder growth, assuming a modest decline in the growth rate of industry participation.

He also expects the underlying net claims expense per policy unit to grow next year, with the 2.3% growth rate in the 2022 financial year (FY22) its “best indicator” of growth in FY23 among resident policyholders.

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Regarding customer relief, Harrison explained that Medibank continues to “assess claims activity, and any permanent net claims savings due to COVID will be given back to customers through additional support in the future.”

Moreover, the insurer’s management focuses on the business’s growth through organic and acquisition opportunities for Medibank Health and health insurance, supported by a “strong capital position” – with its health insurance business-related capital totalling $983.7 million on June 30, 2022. It also has a $148 million unallocated capital to provide “flexibility to fund future inorganic growth” and will consider further capital management “if suitable opportunities do not arise.”

Harrison further revealed that brokers Citi and Ord Minnett rated Medibank as a buy due to an excellent FY22 result, with the former having a price target of $4 on the business and the latter having a price target of $3.75.