nib holdings (ASX:NHF) will be able to focus on its core private health insurance business and related growth opportunities after the divestment of its Australian and New Zealand travel insurance business, Jefferies said in a note on Tuesday.

The insurer sold the travel insurance businesses to Allianz Partners for AU$50 million following the conclusion of a strategic review of nib Travel.

The investment firm said it has reset its investment income assumptions based on higher interest rates, positively impacting returns.

Regulatory changes are expected to reduce participation from older customers from 2027, as the government is set to remove the higher Private Health Insurance rebate for people aged 65 and over. This, however, is seen to be offset by a decrease in claims from the older age group, it added.

Jefferies forecasts nib's adjusted EPS to rise by 0.9% in fiscal 2026 and 7.3% in fiscal 2027.

The brokerage maintained a hold rating but raised price target to AU$7.60 from AU$7.15.