Tag: MPL

Neutral rating retained as Citi adjusts EPS forecasts (slightly) upon marking-to-market led by stronger bonds (lower yields) and stronger equities. The analysts cannot help but conclude this stock looks expensive given the industry’s challenged outlook.

Credit Suisse finds considerable uncertainty prevails for FY20 and FY21 earnings and does not envisage much upside for the share price. The broker finds listed health insurers expensive.

First half results were strong and Deutsche Bank notes ambitious medium-term targets. The company has also flagged the possibility of capital management at its full-year results.

Morgan Stanley suspects a 2% cap on premium increases in 2020 and 2021 is a most likely outcome for private health insurers. Private health has emerged as a key policy debate in the upcoming federal election.

Macquarie believes the loss of the Garrison contract is a setback and anticipates lower FY20 guidance for the Medibank Private health division. The broker believes further acquisitions are required to soften the earnings impact of a potential 2% average price rise and the lost earnings from the contract.

Macquarie believes the potential for a limit on health insurance pricing creates significant margin risks for the industry.

Macquarie’s forecasts now include 2% average premium rises in April 2019 and April 2020, regardless of a change in government. The broker accelerates its forecast long-term margin decline to 6%, consistent with the long-term average profitability of the industry.

UBS considers consumers of the winner with the government’s reforms for private health insurance. While on balance the initiatives suggests claims growth will slow it is not clear that an orderly trajectory will ensue, as the broker notes some initiatives are inflationary.

Macquarie observes policy holder disputes are at the lowest level since 2000. This reduced level of disputes, amid expectations that IT system problems will diminish, increase the potential for improved customer retention and a more positive FY18, the broker believes.

The commentary at the AGM points to a softening top line in the first quarter. The company still expects some normalisation in claims trends from favourable FY16 level.

Citi analysts note GWP has only grown by 1.3% in FY17 to date, below even the subdued guidance the company provided in August. Management has now toward a lower health insurance operating profit.

Value and affordability remain issues in health insurance, driven by increased utilisation and declining participation among young people.

Morgan Stanley believes the company is over earning and margins are set to peak in FY16/17. The broker considers the near-term upside is priced in and downgrades to Underweight from Equal-weight. Target is raised to $2.60 from $2.10.

A moderation in claims growth has improved gross margin and profitability in the first half. Macquarie believes the risk to FY16 earnings is skewed to the upside.

Australia’s largest health fund by policy numbers and premium value in the market, BUPA, has released 2015 profit numbers and warned of market conditions remaining challenging in 2016.

Citi analysts have updated their sector assumptions, projections and insights for insurers in Australia ahead of upcoming financial reports.

Press reports suggest the minister has written to private health insurers asking them to lower their premium increases or justify them with further information.

The broker has initiated coverage of Medibank Private with a Buy rating and $2.40 target.

Should current trends persist the headwinds for FY16 margins may moderate, UBS surmises. Claims growth has moderated and margins are stable in the latest quarterly industry statistics.

Despite the investment appeal in a scaled health insurer with a strong brand, UBS is initiating coverage with a sell rating and $2.00 target.