The blue chip ASX 200 stock in this article could be overvalued at current levels.
That's the view of analysts at Macquarie Group Ltd (ASX: MQG), which see major downside potential for investors over the next 12 months.
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Which blue chip ASX 200 stock?
The stock in question is health insurance giant NIB Holdings Limited (ASX: NHF).
According to the note, Macquarie believes that NIB's performance in FY 2025 doesn't justify its current valuation. Especially given its outperformance of consensus expectations was driven by a lower than expected tax rate. It said:
The stock price performance for NHF's result continued the inconsistent response to earnings quality seen across non-bank financials this reporting season. Perhaps summing up the response; there are no active investors in the top-10 of the register, thus the smallest EPS beats saw the stock respond positively, despite being led by a one-off lower tax rate in the half.
The broker estimates that the blue chip ASX 200 stock's earnings would have been considerably lower if you were to normalised its results. It adds:
The honest truth: #1) There was an ~80bps margin benefit in the arhi division from reserve releases equating to ~$22m; #2) Risk Equalisation contributions as a percentage of claims declined ~60bps in FY25 or ~ $14m; #3) 2H25 NZ losses [per the MRE conference in May '25] turned into +$7m UOP, a ~$9m swing. NHF's FY25 UOP guidance [as provided in May '25] was for a range of $235-250m. The above adjustments would have taken reported earnings of $239m down to $194m.
Major downside risk
In response, Macquarie has retained its underperform rating and $5.60 price target on the blue chip's shares.
Based on its current share price of $7.56, this implies potential downside of 26% for investors over the next 12 months.
Commenting on its recommendation, the broker said:
Underperform. With multiple divisions experiencing operational and environmental headwinds, we retain our cautious outlook.
Earnings changes: FY26E +2.1%, and -1% to +3% thereafter reflecting NDIS and IIHI divisional movements. Valuation: TP unchanged at $5.60 based on a DCF methodology. See the valuation section for details of inputs to our DCF. Catalyst: Monthly Medicare data. AGM on 6 Nov '25.
Though, it is worth noting that the team at Citi doesn't agree with this view. Yesterday, its analysts upgraded its shares to a buy rating with an improved price target of $8.90.
This suggests that upside of 18% is possible between now and this time next year.
