The NIB Holdings Limited (ASX: NHF) share price has risen 8% since 8 November 2023 to reach $7.70. Is it possible the NIB share price could go up another 17% to $9 by Christmas?
The ASX healthcare share mainly offers exposure to private health insurance for Australian residents, but it also offers things like non-Australian private health insurance, travel insurance and has growing exposure to the NDIS.
Christmas is only 20 days away, which is a very short timeframe in investment terms. I believe investors should focus on long-term investing, but it's good to consider the outlook for NIB shares.
Expert view on the NIB share price
NIB recently released its AGM trading update for the first few months of FY24, which showed "overall volume and topline momentum is generally upbeat" in UBS' words.
Since June 2023, the Australian resident health insurance division has seen policy numbers rise by 1.3%, implying growth is "tracking towards the top end of the FY24 guidance range of 3% to 4%." Premium growth of 10.5% is tracking ahead of UBS' estimate.
In the international health insurance division, policy numbers have "maintained strong momentum", with 5.2% growth since June 2023, ahead of UBS' forecasts. UBS said premium growth ahead of policy growth indicates repricing support – the broker thinks there is further margin expansion ahead.
In New Zealand, growth is tracking at the low end, while travel policy numbers and premiums were both down in the double-digits because of the end of the Qantas Airways Limited (ASX: QAN) distribution arrangement in July. The Woolworths Group Ltd (ASX: WOW) contract will start contributing in the second half of FY24.
UBS also pointed to claims indicators suggesting that "claims inflation remains under control". Though the company did not detail claims costs in the first quarter of FY24, there are "potential efficiency gains". The broker also suggested recent Medicare monthly data has "generally been supportive."
Forecasts for the ASX healthcare share
The broker has forecast that NIB could generate earnings per share (EPS) of 48 cents and pay an annual dividend per share of 34 cents. That would put the current NIB share price at 16 times FY24's estimated earnings with a grossed-up dividend yield of 6.3%.
The broker rating on NIB shares is a buy, with a price target of $9.50. A price target is for 12 months, not for Christmas, but it does suggest that NIB shares could rise 24% over the next year if UBS ends up being correct.
