The NIB Holdings Limited (ASX: NHF) share price has observed an 8% upswing since November 8, 2023, reaching $7.70. The key question arises: is there a potential for the NIB share price to surge an additional 17% to $9 by Christmas?
NIB primarily specializes in providing exposure to private health insurance for Australian residents. As part of the ASX Healthcare stocks, the company extends its services beyond Australian borders, offering non-Australian private health insurance, travel insurance, and is progressively establishing a stronger presence in the National Disability Insurance Scheme (NDIS).
Investors and market observers are likely to closely monitor NIB's performance, considering various factors such as market trends, company announcements, and broader economic conditions, to evaluate the likelihood of the share price achieving the speculated 17% increase to reach $9 before Christmas.
While Christmas is only 20 days away, making it a short timeframe in investment terms, the focus should ideally be on long-term investing. However, considering the short-term outlook for NIB shares is relevant.
A recent AGM trading update for the first few months of FY24 indicated positive momentum in overall volume and topline figures, described by UBS as generally upbeat. The Australian resident health insurance division displayed a 1.3% increase in policy numbers since June 2023, suggesting growth is on track towards the top end of the FY24 guidance range of 3% to 4%. Premium growth of 10.5% is ahead of UBS' estimates.
The international health insurance division maintained strong momentum, with policy numbers growing by 5.2% since June 2023, exceeding UBS forecasts. Premium growth ahead of policy growth indicates potential margin expansion.
In New Zealand, growth is tracking at the low end, with travel policy numbers and premiums down due to the end of the Qantas Airways Limited (ASX: QAN) distribution arrangement in July. However, the Woolworths Group Ltd (ASX: WOW) contract is expected to contribute in the second half of FY24.
UBS also highlighted controlled claims inflation, with potential efficiency gains, and suggested that recent Medicare monthly data has been supportive.
The broker's forecast for NIB includes earnings per share (EPS) of 48 cents and an annual dividend per share of 34 cents. With the current NIB share price at 16 times FY24's estimated earnings and a grossed-up dividend yield of 6.3%, UBS rates NIB shares as a buy with a price target of $9.50. While the price target is for a 12-month period, it implies a potential 24% rise over the next year if UBS's projections materialize.