The Medibank Private Ltd (ASX: MPL) share price has been having a tough month.
Since the start of October, the private health insurer's shares have lost 17% of their value.
This has been driven by a "cyber incident" that has seen the data of millions of patients stolen by a hacker.
Is the Medibank share price weakness a buying opportunity?
According to analysts at Citi, investors might want to give Medibank a miss for the time being.
A note from Thursday reveals that its analysts have downgraded the company's shares to a neutral rating and slashed the price target on them by 25% to $3.00.
Based on the current Medibank share price of $2.87, this implies potential upside of 4.5% for investors.
However, the broker doesn't feel this upside offers a good enough risk/reward to recommend it as a buy, particularly given the uncertainty hanging over the company.
What did the broker say?
Citi notes that the impact from the cyber incident is "still very uncertain" and that "consumer sentiment hard to gauge."
Nevertheless, it has revised its earnings estimates lower for the coming years on the belief that policyholder growth will suffer from this development.
The broker explained:
Impact still very uncertain, consumer sentiment hard to gauge. While it is clear that a very significant data breach has occurred, the full impact of the cyber-attack on Medibank still remains uncertain. Questions therefore hang over the remainder of its strategy and it is withdrawing its policyholder guidance for FY23E. Key considerations from here will be the precise nature of the impact and the reaction of consumers to it, which is hard to gauge. This could see the share price move in either direction, but the extent of the current uncertainty moves us to Neutral, lowering our target price to A$3.00. Pulling back our policyholder growth assumptions and marking to market, we lower EPS FY23E: -6%; FY24E: -10%; FY25E: -12%.
