Shares of health insurance giant Medibank Private Ltd (ASX: MPL) have managed to recover some of their recent losses this morning with the stock once again trading at $2.47, a rise of 2.1%.
It's certainly been a volatile week for shareholders. After having climbed as high as $2.59 late last week, it fell to just $2.37 on Friday following the release of its interim earnings report. It was back trading at $2.395 yesterday before it closed at $2.42 for the day.
It's likely that investors were hoping for a stronger earnings report from the insurer, given the lofty premium commanded by the stock. Management reconfirmed profit guidance for the year, while they said management costs would rise once again as a result of project and marketing spend being skewed more heavily towards the second half.
Management's outlook is likely also playing on investors' minds. The company predicted "health insurance industry headwinds" which were reiterated by rival NIB Holdings Limited (ASX: NHF) when it reported earlier this week.
Should you buy?
Most investors would have considered buying Medibank Private stock at one time or another. While it is a strong company however, it would be very difficult to justify buying the stock at its current price. With an uncertain outlook and what seems like a heavy reliance on cost-cutting initiatives to drive profit growth, adding the company to your watchlist seems like a more appropriate action to take.
