hi yep current range for bankers is 15x to 22x. so hopefully its...

hi yep current range for bankers is 15x to 22x. so hopefully its at the lower end at 15x, i.e. around 4.1BN.

Also not just p/e, a good dividend yield from a good payout is required for an insurer. If you look at SUN, IAG, they have 10% grossed up yields(although they are more volatile) and if u see their chart, quite well supported due to this. I would argue medibank's yield is needed to be 3% less grossed up as its less risky. works out around 5% FF yield not included special.

Assuming payout ratio 75%(todays AFR), that implies a p/e of right on 15x multiple, to get the 5% FF yield.:

hypotheticals

Share price $3.00
P/E 15x
EPS $0.20
long term eps growth rate: 5-6%(in line NIB)
short term eps growth rate(cost cut 10-15%)
payout ratio: 75%
Yield
0.20*0.75 = 0.15
0.15/3*100 = 5% yield FF.

this should allow a solid 10% to 15% stag due to the short run growth rate cost cut.