Many Australians will have a private health insurance policy with Medibank Private Ltd (ASX: MPL) and quite a few will own or have considered buying Medibank shares. However, that might be a bad idea if the analysts at Goldmans Sachs are correct with their bearish views on Medibank shares.
According to a June 4 research note out of the investment bank, Medibank shares could have a long way to fall from today's price of $3.62. In fact Goldman's value Medibank shares at just $2.50 using an equal blend of its "DCF and P/NTA vs. ROTE" valuation approaches.
The analysts considered what impact APRA's capital standards inquiry could have on the health insurance industry, although they noted that the updated framework is not expected to be implemented until 2021.
Goldman's also notes how both Medibank and its rival NIB Holdings Limited (ASX: NHF) are both more generally vulnerable to the up or downside risks over changes in government-led policy for the industry.
For example premium increases every year are still regulated by the government and subject to potential change.
This afternoon NIB Holdings shares hit a new record high of $8.02 to show government policy is generally supportive in this space.
