NIB Holdings Ltd (ASX: NHF) shares have been heavily sold in 2024 and are down more than 21% this year to date.
At first glance, it might seem like quite the discount, with the insurance giant trading off its former highs by so much.
But markets, like Shakira's hips, usually don't lie!
NIB has been under pressure thanks to a series of company-specific headwinds that have plagued its stock price this year.
Added to that, there is widespread pessimism across the financials sector, excluding banks, with the prospects of lower interest rates, and higher premiums to contend with.
For investors interested in long-term positioning, this could be an opportunity. Let's look at what's driving the stock and where analysts see it heading.
Why NIB shares have declined
Investors started unloading NIB shares after the company's FY24 results, released in August.
While the private health insurer posted a 9.3% revenue increase and a 67% jump in net profit, concerns over rising claims have weighed on its stock price.
Claims expenses blew out to $2.1 billion, up 5% year over year. Although the CEO attempted to put some water on the proverbial fire, he still acknowledged the "pressure on premiums and underwriting margins".
Investors weren't impressed. Au contraire – they dumped NIB stock and fled for the hills. Or to some other investment.
The fallout was sharp and sliced more than 17% off NIB's market value in a single session.
Now the animal spirits have failed to reignite NIB shares on the ASX, with the stock sliding a further 2.5% this past month.
Are they a buy?
But the question we've all scrolled this far down to seek answers to is thus: After the declines, are NIB shares a buy?
The consensus of analyst estimates would agree. It rates NIB a buy, according to CommSec.
And the distribution isn't even either. Seven buys, four holds. No sell ratings. The bias is subsequently bullish.
Goldman Sachs also remains optimistic about NIB, giving it a buy in September with a price target of $6.60.
The broker likes NIB's position in the sector given its "defensive exposure" to the space. This should help with operating earnings, and NIB shares, it says.
Goldman also predicts fully franked dividends of 25 cents per share in FY25, rising to 29 cents in FY26, offering yields of 4.1% and 4.8%, respectively, at the current share price.
Foolish takeaway
Despite recent volatility, NIB shares have plenty of broker support. That being said, one can't overlook the headwinds leading to this year's price declines.
