Medibank (ASX:MPL) is expected to benefit from benign claims and easing competition, according to Morgan Stanley analyst Andrei Stadnik, The Australian reported Tuesday.

The investment bank believes that Medibank should deliver sustainable margins and command higher multiples as it becomes a health company.

Standnik added that Medibank has many ways to grow profit margins due to its investments in health services like primary and specialist care, which also tap into the growing demand for services.

Morgan Stanley upgraded Medibank to overweight from equal-weight with an increased price target of AU$5.57.

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)