The NIB Holdings Ltd (ASX: NHF) share price has slipped slightly this morning. As of 11 am, shares are trading 0.81% lower at $7.35 a piece.
NIB's share price has jumped 33.1% since January. But thanks to a steep 17.8% plunge in late-August last year, the health insurer's share price is still down 2.26% for the year.
In a recent note to investors, Macquarie Group Ltd (ASX: MQG) revealed what it expects for NIB's share price over the next 12 months.
Macquarie's stance on NIB shares
The broker has confirmed its underperform rating on NIB shares and its target price of $5.60.
That represents a potential downside of 23.8% for investors over the next 12 months.
"With multiple divisions experiencing operational and environmental headwinds, we retain our cautious outlook," Macquarie said in its note.
Macquarie expects more political and regulatory risk in FY 2026 as the Health Minister takes a second term and government focus on NDIS funding intensifies.
What to keep an eye on
Key catalysts to watch are the government review into phoenixing – where a company is deliberately liquidated to avoid paying debts before being restarted under another name, changes to the price approval process, changes to the student deed, and findings of the PALM (Pacific Australia Labour Mobility scheme) review.
Macquarie notes:
Residents – Payout Ratio: We expect further direction from the Department of Health on #1) phoenixing; #2) look-back mechanism for price approval, and #3) limits to "free periods", to be released over CY25 and impact CY26 results: "Why a claims payout ratio misses the mark" published 13 Jun '25. Worst case: this accounts for ~12.4% of Group UOP by FY27.
It adds that for international workers, even if NIB retains the PALM contract, it is unlikely to retain the high margins it enjoyed previously. At worst, this could account for 2.5% of the group's underlying operating profit or 4%-5% of the group's underlying operating profit with 50% stranded costs. It also said:
International – Students: NHF's costs are below the 12% commission cap so we foresee this change having limited impact. […] Worst case: this accounts for ~2.2% of Group UOP, before stranded costs and potential knock-on for residents.
For NDIS funding, the broker expects earnings declines in the coming 18-24 months as scheme reform remains elusive. In a worst-case scenario, this could account for 4.8% of the group's underlying operating profit.
Macquarie notes that a new division head has been appointed to NIB New Zealand. This could pose a downside earnings risk as high as 6.6% on the group's underlying operating profit.
Earnings changes: FY25E: +1.8%; FY26E: -3.6%; and -1% to -5% for FY27 to FY29 reflecting above mentioned divisional challenges and MTMs.
