Medibank Private Ltd (Medibank) started 2022 with a bang but its share price started taking hits as the days progressed, with yesterday's trade at $3.15 per share.

On January 07, Medibank's shares peaked a $3.60 per share. However, since then, investors have chopped more than 12% off the insurer's share price value until the opening of trade on February 03, according to Motley Fool.

What does this mean for Medibank shareholders? Analysts from JP Morgan Securities Australia (JP Morgan), led by Siddharth Parameswaran, expect Medibank to benefit from a winding back of COVID-19 claims in the short term. Still, profits might not “materially benefit” due to its obligations to policyholders, the analysts added.

Therefore, the analysts gave Medibank a “cautious” outlook in the medium term, given the material increases in capital requirements, a partial return to prior profits in IIHI and travel, lower rate increases potentially below underlying inflation trends, uncertainties arising from the federal election, and relative valuation differences with other stocks in the sector.

Read more: Medibank identifies major healthcare trends for 2022

In the long term, the JP Morgan analysts noted a risk that “claims utilization returns to long-run trends, making holding margins difficult following ever-lower premium increases.”

They predict that Medibank will have premium revenue of $6,983 million for FY22 and $7,256.2 million in FY23, carrying down to statutory NPAT of $408 million and $422.5 million, respectively – and these figures are expected to lead to operating margins of 7.8% in FY22 and an adjusted return on equity (ROE) of 21.2% this year.