Medibank Private's outlook update appears to have met if not outpaced Morgan Stanley's forecasts, the company posting strong growth in non-resident business, and the short-stay surgery model starting to yield results.

About 4% of the company's procedures are now trafficked through the model, up from 2.2% in FY21, yielding implied saving of $3,000 to $9,000 per procedure, advises the broker.

Meanwhile, resident cash claims have been sharply below forecasts and the broker believes stability in this sector, combined with the short-stay developments, point to structurally lower claims expense. Morgan Stanley adds the company is leading the push to create sustainable systems.

FY23 and FY24 EPS forecasts move upwards.

Equal-Weight rating and $3.43 target price retained.

Sector: Insurance.

Target price is $3.43.Current Price is $3.49. Difference: ($0.06) - (brackets indicate current price is over target). If MPL meets the Morgan Stanley target it will return approximately -2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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