Why did the Medibank share price just crack a new all-time high?

The Medibank Private Ltd (ASX: MPL) share price reached a new all-time high of $3.74 on Tuesday.

And while the private health insurer’s shares faded as the day went on, they are still up by a sizeable 8.5% since the start of the month.

Why is the Medibank share price at a record high?

Investors have been bidding the Medibank share price higher this month after it delivered a solid result for FY 2022.

For the 12 months ended 30 June, Medibank reported group revenue up 3.2% year over year to $7,128.5 million and segment operating profit up 11.9% to $638.1 million.

And while its net profit after tax fell due to a $24.8 million loss in net investment income, this didn’t stop the Medibank board from increasing its dividend.

What was the reaction?

One leading broker that was impressed was Citi.

In response to the release, the broker retained its buy rating and lifted its price target on the company’s shares to $4.00.

So, with the Medibank share price fetching $3.70 currently, Citi sees scope for it to rise a further 8%.

What did the broker say?

Citi was pleased with its performance and outlook. And while it acknowledges that the Medibank share price is not cheap, it sees reasonable value in it. The broker explained:

PHI performing well plus tailwind from investment yields Medibank’s PHI business is performing well and we forecast an outlook of largely stable margins paired with reasonable top line growth. Medibank Health is also targeted to grow profit at a rate of at least 15% and higher interest rates should provide a reasonable tailwind for investment income. This keeps us attracted to the Medibank story despite value being reasonable rather than cheap. Largely reflecting marking to market and allowing for higher yields as well as a little more PHI revenue growth, we lift EPS, FY23E: +6%; FY24E: +2%. We retain our Buy call lifting our target price to A$4.00.

The post Why did the Medibank share price just crack a new all-time high? appeared first on The Motley Fool Australia.

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• Medibank share price dips despite dividend boost

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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