What could a tighter household budget mean for NIB stocks?


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NIB Holdings Limited (ASX:NHF) Stocks have fallen slightly over the past month, but what is their outlook for the future?

NIB’s stock price slipped 0.41% last month, closing at $7.33 on Tuesday. It was 2.37% more on the day.

So let’s see what could happen to the shares of the health insurer.

What future for private insurance?

UBS recently pointed out that more and more Australians are seeing the benefits of private health insurance despite “continuing increases in out-of-pocket spending”.

However, UBS analyst Scott Russell predicts clients will pay more attention to monthly premiums “in tighter household budgets.” In a note quoted by The Australiananalyst Scott Russell said:

Change is inevitable and we see that the typical profile is younger, under 35, and in the lower/middle income brackets; many of them are nib and ahm customers – lower value – and seem to target the Medibank, Bupa and HBF brands.

But despite the risk of Australians switching health insurers, Russell still sees an upside in NIB’s share price. He raised the company’s price target from $7.10 to $7.70. This is 8% more than the current share price.

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

The analyst also updated Medibank Private at a buy rating with a price target of $3.90. That’s 11% higher than the company’s current stock price of $3.50.

NIB will publish its annual results on August 22.

Share price overview

Shares of NIB have climbed 2% over the past year and are up nearly 5% year-to-date.

For perspective, the S&P/ASX 200 Financial Index (ASX:XFJ) is down 2.6% so far in 2022.

NIB has a market capitalization of approximately $3.4 billion based on the current share price.


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