NIB Holdings Limited (ASX: NHF) shares have had an underwhelming time in 2023.
Since the start of the year, the private health insurer's shares have lost 4.5% of their value.
As a comparison, the ASX 200 index is up approximately 7% over the same period.
Will things be better for NIB shares in 2024?
There are a few factors that could have a major say on how NIB shares perform next year.
The first is the performance of the market as a whole. If interest rates are cut across the globe, it could give investor sentiment a major boost and drive shares higher.
Premium rate increases are another factor that could impact the company's share price. According to reports, the health insurance industry is seeking a 6% premium rate increase on average for next year.
While it is unclear if this will be approved, it is notably higher than what the market was expecting and compares to increases of 2.9% in 2023, 2.7% in 2022, and 2.74% in 2021. Goldman Sachs commented:
The 6% rate increase quoted in the AFR is higher than we expected noting claims cost inflation remains somewhat benign reflecting lower utilisation for mental health and rehab in particular.
What else?
Another factor to be aware of is the potential change to the NDIS.
NIB entered the NDIS market at the end of last year through the acquisition of plan manager, Maple. It raised $158 million to support its entry and has since made a number of other acquisitions, growing its presence in the market.
However, proposed changes to the NDIS could be a blow to its ambitions. A review is expected to be released in 2024.
Can its shares rise?
The good news is that Goldman Sachs has taken all the above into consideration and remains bullish on NIB shares.
It currently has a buy rating and an $8.40 price target on them, which implies a potential upside of 13.5% for investors over the next 12 months.
The broker also expects a fully franked 3.9% dividend yield for FY 2024, boosting the total potential return to approximately 17.5%.
