NHF advanced +2.5% on Thursday following the news that a surprising number of young people are taking up private health insurance despite the risks of the cost-of-living crisis pushing patients into the public sector. Official data released on Thursday showed that more than 15 million Australians now have private health cover following a 5% increase in Australians aged in their 20s taking out hospital cover in the quarter. However, the stock is still down ~22% for 2024, largely due to its financial performance and external market factors.
The company has been grappling with increased claims expenses and higher hospital costs. Its travel insurance segment has faced challenges, including discontinuing its partnership with Qantas and weaker sales compared to prior years. NIB has raised premiums to counter rising costs, and concerns remain about how these increases may impact policyholder retention and affordability in a competitive market. Also, potential regulatory changes are hanging over the stocks/sector, which is never good for share price performance.
- We are starting to feel that NHF has fully built in the recent headwinds with its 5.3% projected yield and steep discount to its historical valuation, providing reasonable risk/reward.
MM is cautiously bullish toward NHF ~$5.70
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