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Highlights:
- nib Holdings shares fell 4% to AU$5.72, marking a third consecutive day of losses.
- Citi lowered nib’s target price from AU$6.55 to AU$6.45 and reduced FY25 profit and EPS forecasts.
- nib aims to recover from expected New Zealand division losses through pricing, cost savings, and lower claims inflation.
Shares of nib Holdings (ASX:NHF) dropped by 4% to AU$5.72 on Wednesday, continuing a losing streak for the third consecutive session. The Australian health insurance provider’s recent performance has drawn mixed reactions from analysts, with Citi revising its target price downward to AU$6.45 from AU$6.55, while maintaining a “neutral” rating. This revision comes as nib's fiscal year 2025 guidance revealed lower-than-expected profit projections, sparking investor caution.
According to Citi, nib’s latest guidance for underlying operating profit (UOP) in FY25, set at AU$235 million to AU$250 million, came in below the brokerage’s previous expectations as well as consensus estimates from market peers. In response, Citi has adjusted its own FY25 UOP forecast to A$247 million, translating to roughly $161.27 million. Additionally, Citi lowered its earnings per share (EPS) estimates by 6% for FY25 and by 0.2% for FY26 and FY27.
A notable factor in nib's outlook is its New Zealand division, where the insurer has forecast a AU$10 million loss in the first half of FY25. nib’s management, however, expressed confidence in reversing this loss by the end of the fiscal year. Plans to achieve this include potential price increases, targeted cost-saving measures, and efforts to reduce claims inflation, which has pressured profit margins in the region.
Market sentiment on nib Holdings remains split. Data from LSEG shows that half of the 10 analysts covering the stock rate it a “buy,” while the other half recommend a “hold,” with a median price target of AU$6.80. nib’s share price has fallen 19.4% year-to-date as of Tuesday’s close, reflecting broader investor concerns about profitability amid rising operating costs and competitive pressures in the insurance sector.
