As we tick over into FY26, all eyes are focused on stocks offering strong potential gains or losses over the next 12 months.
At the close of FY25 yesterday, leading winners were healthcare stocks. The S&P/ASX 200 Healthcare Index (ASX: XHJ), jumped 1.58% on Monday, and is up 0.27% as of lunchtime today.
Health insurance provider NIB Holdings Ltd (ASX: NHF) was Monday's best index performer. NIB shares had an exceptional start to the week, shooting 9.43% higher to close at $7.08 per share. The increase followed an optimistic report from ASX broker UBS.
But in its latest note to investors, Macquarie Group appears to hold a different view on the stock.
Today the health insurer's share price has corrected by around 2.26%, falling to $6.92 as of lunchtime.
NIB's share price has had a rollercoaster ride over the past year, rising 25.36% since early January. But the stock suffered a sharp 17.74% drop in late August last year after following its full-year results announcement. Over the year, shares are currently 4.55% lower.
For context, the S&P/ASX All Ordinaries Index (ASX: XAO) is 0.14% higher as of lunchtime today.
Here's what Macquarie has to say about NIB in FY26.
Macquarie less confident about NIB shares
The broker has maintained its underperform rating on NIB shares. It cited a cautious outlook off the back of the company's operational and environmental headwinds across multiple divisions.
It has revised its target price on the stock to $5.60, up from $5.55 previously. This would represent a 20.9% decline from yesterday's close and a 19.07% drop from the current trading price.
The broker also expects company earnings to be 1.8% higher for FY25. But, for FY26 it expects a 3.6% decline due to divisional challenges.
In its investor note, Macquarie explained that political and regulatory risk will grow in FY26 as the health minister is given a second term and the NDIS moves into focus.
The broker said it has not included concerns around industry reform into its earning forecast at this stage.
However, it has forecast slight earnings pressure for the company's IIHI (International Inbound Health Insurance) division in FY26. This is largely due to migration trends slow for students, contract pricing comes under pressure, and competition increases across products.
In NIB's New Zealand division, Macquarie notes that while it expects underlying profit to be mostly positive in FY26, appointment of a new division head could create some downside earnings risk for the division.
"Reshuffling of divisional executives often lead to changes in strategy and earnings rebasing," the note said.
The broker is also keeping a close eye on phoenixing, changes to the price approval process, change to the students deed, and findings of the PALM review. All of these issues could create potential headwinds for the healthcare stock.
