Medibank has said it will grow revenue by 4 per cent to $6.6 billion and operating profit, expected to rise 10 per cent to $282 million.
Medibank increased premiums by 6.49% on 1 April 2014 implies revenue target should easily be met. However underwriting margin of 4.5% (average last three years). I think market is believing Medibank can get equivalent to Bupa's underwriting margin of 6.5%.
With agreements already in place with Ramsay and Healthscope approximately 50% of hospital claims, hard to see where savings in pricing will be made in short term.
Medibank Private is a very good business but over priced. I feel sorry for George Savvides, Cormann has left him in untenable position.
MPL Price at posting:
$2.10 Sentiment: Sell Disclosure: Not Held
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