The NIB Holdings Limited (ASX: NHF) share price is up 0.5% amid a leading expert's rating change on the ASX healthcare share. This coincides with the S&P/ASX 200 Index (ASX: XJO) rising by 0.6%, so the stock is not outperforming.
As we can see on the chart above, NIB shares are down by 7% in the last month. This sizeable decline in a relatively short amount of time has led one expert to think that the NIB share price is now good value.
Let's have a look at how much upside broker Morgans thinks the ASX healthcare share has.
Buy rating on NIB shares
According to reporting by The Australian, Morgans Financial has decided to change its rating to add on NIB shares.
A price target on a business tells us where the broker thinks the share price will be in 12 months. Analysts don't have a crystal ball, but it's just their best guess about where the valuation will go. If they're correct, some price targets can imply large shareholder gains.
As reported by The Australian, the price target on the ASX healthcare share is $7.92. That suggests a possible rise of 13%. Combine that with the potential dividends over the next 12 months, and we're looking at a possible mid-to-high-teen return from NIB shares.
What has happened in recent times for the ASX healthcare share?
The company's last price-sensitive announcement was in March 2024. It revealed that its health insurance premiums would increase by an average of 4.1%. Its previous two increases, in 2023 and 2024, were the two lowest increases of the past 20 years.
At the time, NIB acknowledged that many household budgets were strained, but spending was growing across healthcare, driven by "an ageing population, the rise of chronic conditions and the cost of new technologies."
NIB's management noted that it aspires to be a health management and health insurance company.
The company also recently presented at the Macquarie conference in May. In that presentation, it showed that its revenue had grown every single year since FY05 and its underlying operating profit has been growing over the long term as well, aside from the COVID-hit years.
One of NIB's successes in recent years has been expanding into adjacent markets such as New Zealand, international workers and students, travel insurance, disability 'navigation', and more. The business has also been growing its market share in the core Australian private health insurance market.
NIB aims to become the disability sector's leading navigator by supporting NDIS participants and others with identified disabilities. It aims to reach around 50,000 participants by the end of FY25.
Outlook for NIB shares
In FY24, the business is expecting to achieve net policyholder growth of between 3% and 4% while maintaining stable underlying margins, before gradually returning to the target of between 6% and 7%.
Morgans seems confident on the company's outlook.
