Medibank Private Ltd (ASX: MPL)

Medibank Private Limited (ASX: MPL) is an integrated healthcare company that provides private health insurance and health solutions in Australia. MPL also offers other insurance, including travel, pet, and life insurance, to make things easier for its customers.

Recommendation Rationale - SELL at AUD 4.420

• Surpassed Resistance: MPL is trading close to the ‘Resistance 2’ level recommended on 22 November 2024. Therefore, MPL can face resistance at the current levels.
• Overvalued Multiples: On a forward 12-month basis – key trading multiples (Price/Earnings, Price/Cash Flow, and Price/Book) are higher than the median of the Insurance industry.
• Regulatory Risks: The private health insurance industry is heavily regulated in Australia. Changes in government policies, such as increased scrutiny on premium hikes, tax incentives for insurance, or changes to Medicare, could negatively impact MPL's profitability.
• Operating Profit Decline: During H1 FY24, operating profit declined by 5.3% against H2 FY24, due to increase in corporate heads.

Daily Price Chart

Daily Technical Chart, Data Source: REFINITIV

Valuation Methodology: Price/Cash Flow Approach (FY June'26E) (Illustrative)

MPL is expected to trade at a slight premium to its peers considering the 6.1% and 37.0% YoY growth in H1 FY25’s revenue from external customers and net investment income, respectively. For conducting valuation, the following peers have been considered: NIB Holdings Ltd (ASX: NHF), AMP Ltd (ASX: AMP), and PEXA Group Ltd (ASX: PXA).

Considering the rally in share price movement, current trading level, and risks associated, the share price can witness resistance at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current market price of AUD 4.420, as of 27 March 2025, at 3:41 PM AEDT.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical issues prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 27 March 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.    

Note 4: Kalkine reports are prepared based on the stock prices captured either from REFINITIV or Trading View. Typically, REFINITIV or Trading View may reflect stock prices with a delay which could be a lag of 25-30 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.

Note 5: Dividend Yield may vary as per the stock price movement. 

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.