NIB shares rally as UBS upgrades to 'buy'
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The news: NIB Holdings was one of the best performing ASX 200 companies in morning trade after UBS upgraded the health insurer to 'buy'.
The numbers: NIB shares were up 5.7% to $6.84 at 11am AEST, extending gains of more than 20% since the turn of the year.
UBS upgraded the stock from 'neutral' to 'buy' and lifted its price target from $7.35 to $7.85.
Its analysts said that after trading at an average 7% discount to market rival Medibank over the past five years, NIB now trades at a 30% discount.
The context: The analysts noted that, alongside improved value appeal, NIB may also benefit from an improved Australian Residents Health Insurance (ARHI) margins.
They said that under a conservative scenario where ARHI margins moderate back to target levels, New Zealand only partially recovers and non-private health insurance segments are ascribed zero value, NIB's value upside could be 20%.
The source: UBS research
