Why this analyst is bullish on the NIB (ASX:NHF) share price

It’s been a good year so far for the private health insurer — and it could get even better, according to one analyst

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The NIB Holdings Limited (ASX: NHF) share price has had a solid year thus far.

The outlook for shares in the private health insurer could be even rosier, according to some prominent analysts.

So, why does the NIB share price have such a healthy outlook?

Portfolio manager lauds the outlook for NIB

The NIB share price was highlighted in a recent interview hosted by Livewire Markets, titled ‘how to uncover the next small-cap champions’.

The panel consisted of two noted Australian portfolio managers, with the theme rotating around healthcare and tech.

Both analysts noted the interesting thematic and intersection between healthcare and technology.

According to the panel, governments around the world are struggling with healthcare costs. As a result, technology has an important role to play in managing these challenges.

Mike Murray, who is head of domestic equities at Australian Ethical Investment Limited (ASX: AEF), highlighted NIB.

According to Murray, NIB is an “innovative company” that is diversifying from its bread and butter of health insurance. An example of this is their joint venture, Honeysuckle Health, which focuses on data science and develops programs that help people better invest in their health.

Murray noted that prevention ultimately helps the end customer and in turn also helps the health insurer in NIB.

More on the NIB share price

It has been an eventful year for the NIB share price thus far. Since the start of 2021, shares in the private health insurer have soared more than 12.5%.

At one point, the NIB share price was flying more than 35% higher for the year. However, the company gave back much of its gains for the year after releasing its full-year report.

For FY21, NIB reported strong policyholder sales growth and retention, with policyholder growth lifting 4.2% versus an industry average of 3.1%.

Other highlights from the company’s full-year report included;

  • Total group revenue of $2.6 billion, up 2.9% on the prior corresponding period (FY20 $2.5 billion);
  • Group expense claim of $2 billion, up 2.5% (FY20 $1.95 billion);
  • Group underlying operating profit (UOP) of $204.9 million, up 39.5% (FY20 $146.9 million);
  • Net profit after tax (NPAT) of $160.5 million, up 84.5% (FY20 $87 million); and
  • Fully-franked final dividend of 14 cents per share, up from 4 cents per share.

Despite the strong report, investors remained cautious about the health insurer’s outlook.

The NIB share price closed yesterday’s trading session at $6.72.

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Motley Fool contributor Nikhil Gangaram owns shares of Australian Ethical Investment Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Australian Ethical Investment Ltd. The Motley Fool Australia has recommended Australian Ethical Investment Ltd. and NIB Holdings Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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