On Wednesday, TD Cowen adjusted its outlook on AXIS Capital Holdings Limited (NYSE:AXS), increasing the price target to $127.00 from the previous $118.00, while keeping a Buy rating on the stock. The adjustment follows a recent event where TD Cowen analysts had the opportunity to engage with AXIS Capital's management team.
At a dinner attended by key AXIS Capital executives, including Head of North America Insurance Mike McKenna and CFO Peter Vogt, discussions revolved around the company's confidence in its underwriting capabilities and reserve strength. Management also introduced the new centralized Chief Underwriting Officer (CUO) underwriting review process and updated the long-term incentive compensation plan.
The analysts highlighted AXIS Capital's valuation, noting that it trades at 7.9 times its estimated 2025 earnings per share (EPS), which is significantly lower than the average of its Specialty peers, who trade at 22.4 times. This valuation gap was emphasized as a key point in maintaining the Buy rating for the insurer's shares.
AXIS Capital's commitment to strong underwriting standards and its recent operational changes appear to be integral to the firm's strategy going forward. The company's management has expressed confidence in these measures to bolster AXIS Capital's market position.
The revised price target of $127.00 reflects the analyst's confidence in AXIS Capital's future performance and potential for growth. The firm's current trading valuation compared to its industry peers suggests that AXIS Capital could offer an attractive investment opportunity.
In other recent news, AXIS Capital has reported significant growth in Q3 2024, with a notable annualized return on equity (ROE) of 17.3% and a 26% increase in book value per share over the same period last year. The company's strategic measures resulted in profitable growth in both insurance and reinsurance segments, recording the highest third-quarter gross premiums written at $1.9 billion.
AXIS Capital's net income reached $173 million, equivalent to $2.04 per diluted share, and a consolidated combined ratio of 93.1% was achieved. A significant net investment income of $205 million was noted, marking a 33% increase from the previous year. However, the reinsurance segment saw a decrease in gross premiums written by 8.7% due to selective underwriting practices.
The company is on track to complete the reshaping of its primary casualty book by the end of the year and expects potential growth opportunities in 2025. Further investments in technology and talent will continue, supporting the company's growth trajectory. These are recent developments that reflect AXIS Capital's strategic execution and focus on profitable growth.
InvestingPro Insights
AXIS Capital Holdings Limited (NYSE:AXS) has been demonstrating strong financial performance and market positioning, aligning with TD Cowen's bullish outlook. InvestingPro data reveals that AXS is trading at a P/E ratio of 12.55, which is considerably lower than the industry average mentioned in the article, supporting the analysts' view on the company's attractive valuation.
InvestingPro Tips highlight that AXS has raised its dividend for 21 consecutive years, indicating a strong commitment to shareholder returns. This consistent dividend growth, coupled with the company's expected net income growth this year, reinforces the positive outlook on the stock.
The company's recent performance is also noteworthy, with InvestingPro data showing a robust 66.2% price total return over the past year. This strong return, along with the stock trading near its 52-week high, suggests investor confidence in AXIS Capital's strategy and market position.
For readers interested in a deeper analysis, InvestingPro offers 13 additional tips for AXS, providing a comprehensive view of the company's financial health and market performance.
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