Nib Holdings' (ASX:NHF) fiscal 2026 underlying operating profit was in line with forecasts, while its net profit after tax exceeded expectations due to stronger investment income, Jarden said in a Monday note.

The company's special dividend of AU$0.05 per share "was a positive," with Nib Holdings indicating further capital management to come, the equity research firm said.

However, the company's key Australian residents health insurance business (ARHI) was weak at both a policyholder growth level as well as a gross margin level, Jarden added. Nib printed policyholder growth of 1.9%, short of Jarden's estimate of 2.3%, while the ARHI net margin deteriorated to 6.2%, compared with Jarden's 6.6% forecast.

The investment firm expects Nib Holdings shares to trade weaker on Monday given "soft" fiscal 2027 group underlying operating profit guidance soft and lower gross margins for ARHI.

Jarden reaffirmed an overweight rating on Nib Holdings with a target price of AU$7.70.

Nib Holdings' shares fell nearly 9% in recent Monday trade.