What could a tighter household budget mean for NIB shares?

a woman sits in her home with chin resting on her hand and looking at her laptop computer with some reflection with an assortment of books and documents on her table.a woman sits in her home with chin resting on her hand and looking at her laptop computer with some reflection with an assortment of books and documents on her table.

NIB Holdings Limited (ASX: NHF) shares have fallen slightly over the past month, but what are their future prospects?

The NIB share price has slipped 0.41% in the last month, closing at $7.33 on Tuesday. That was 2.37% higher on the day.

So let’s check what could be ahead for shares in the healthcare insurer.

What’s ahead for private insurance

UBS has recently highlighted how more Australians see the benefit of private health insurance despite the “ongoing increase in out-of-pocket expenses”.

However, UBS analyst Scott Russell is predicting customers will pay more attention to monthly premiums “under tighter household budgets”. In a note cited by The Australian, analyst Scott Russell said:

Switching is inevitable and we note the typical profile is younger, less than 35, and in lower/middle income bands; many of these are customers of nib and ahm – lower value for money – and appear to be eyeing Medibank, Bupa and HBF brands.

But despite the risk of Australians changing health insurers, Russell still sees upside in the NIB share price. He has lifted the company’s price target from $7.10 to $7.70. That’s 8% more than the current share price.

Russell predicts NIB’s earnings per share (EPS) could jump by 11 to 22% in FY23, claiming the company “enjoys similar tailwinds” to Medibank Private Ltd (ASX: MPL), The Australian reported.

The analyst has also upgraded Medibank Private to a buy rating with a $3.90 price target. That’s 11% more than the company’s current share price of $3.50.

NIB will report its full-year results on 22 August.

Share price snapshot

NIB shares have climbed 2% in the past year and are up nearly 5% year to date.

For perspective, the  S&P/ASX 200 Financials Index (ASX: XFJ) has lost 2.6% so far in 2022.

NIB has a market capitalisation of about $3.4 billion based on the current share price.

The post What could a tighter household budget mean for NIB shares? appeared first on The Motley Fool Australia.

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More reading

Motley Fool contributor Monica O’Shea has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended NIB Holdings Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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