"Share price has appreciated strongly since your post. Do you think approval from the Minister to increase insurance cover premiums has influenced this and does this decision have any impact on your assessment on valuation?"
Hi Arpeebee,
After a share price has fallen from $6.50 to $4.80 in the preceding I wouldn't read anything into a subsequent move $4.80 to $5.40.
To me that's little other than market noise.
In terms of to extent to which the award of a premium increase by the authorities has an impact on my valuation: simply, it doesn't.
For two reasons:
1.) Health care costs rise over time, so increases in private health insurance premiums go up over time, so there is nothing unusual about this latest increase,
and
2.) I am an owner of this business, not just because of what might happen in one particular financial period, but because of the shareholder value creation ability of the company and its management over time.
So what happens during any given day, week, month, or even single financial year, is not something with which I concern myself too much.
Instead, I look for the company to continue doing what it does over time, namely serve customers well, develop new markets, innovate, manage risks prudently and apply my capital judiciously.
"I note mean consensus of 9 analysts is outperform with an average target price of $5.99 (highest $6.70, lowest $4.90)."
I pay zero attention to the target prices and recommendations of stockbroking analysts.
I would just as soon take my investing cues from a troupe of monkeys as I would from so-called "analysts". Overwhelmingly, when it comes to creating value for their clients, stockbroking analysts are inordinately inept.
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