On Wednesday, Keefe, Bruyette & Woods analyst Meyer Shields updated the firm's stance on AXIS Capital (NYSE:AXS), raising the 12-month price target to $96 from the previous $94 while maintaining an Outperform rating on the stock. The adjustment comes in the wake of AXIS Capital's third-quarter earnings for 2024, which included a conference call that provided further insights into the company's financial performance and outlook.
Shields noted the decision to maintain the Outperform rating and increase the price target is based on a combination of factors. Specifically, the new target price is set at 8.5 times the firm's updated 2025 estimated earnings per share (EPS) and 144% of the year-end 2024 estimated book value per share (BVPS). The revised estimates for the company's EPS for the years 2024, 2025, and 2026 are now $10.60, $11.25, and $11.75, respectively. This represents a change from the previous estimates of $10.95, $11.00, and $11.35.
The analyst clarified that the lower 2024 EPS estimate accounts for anticipated higher catastrophe losses in the fourth quarter of 2024. However, the updated estimates for 2025 and 2026 reflect expectations of faster premium growth and reduced expenses. These positive factors are somewhat balanced by the anticipation of higher core loss ratios.
In the evaluation of AXIS Capital's market position, Shields expressed confidence that the company's valuation gap compared to its specialty-focused peers is likely to narrow. This optimism is based on AXIS Capital's continued delivery of strong and stable underwriting and investment income, which is expected to support the stock's performance going forward.
In other recent news, AXIS Capital Holdings Limited demonstrated a robust financial performance in the third quarter of 2024. The company reported a net income of $173 million, or $2.04 per diluted share, and an annualized return on equity of 13%. The company also saw a significant increase in book value per share to $64.65, marking nearly 20% growth year-to-date. The third quarter gross premiums written totaled $1.9 billion, a 1.6% increase from the previous year, marking the highest for a third quarter.
Despite substantial losses from Hurricanes Helene and Milton, AXIS maintained a solid combined ratio of 93.1%. The company also returned $77 million to shareholders through dividends and share repurchases as part of its recent developments. AXIS is also making strategic investments in technology to enhance efficiency.
Analysts note a bearish concern with the company facing $78 million in catastrophe losses from Hurricanes Helene and Beryl. On the bullish side, AXIS achieved a 4.7% increase in gross premiums in the insurance segment, driven by property and casualty growth. Looking ahead, AXIS anticipates a strong finish to 2024 and expects continued growth in 2025, backed by its diverse product offerings and geographic capabilities.
InvestingPro Insights
AXIS Capital's strong market position, as highlighted by Keefe, Bruyette & Woods, is further supported by data from InvestingPro. The company's P/E ratio of 11.44 and P/E ratio (Adjusted) of 10.88 for the last twelve months as of Q3 2024 suggest that the stock may be undervalued relative to its earnings potential. This aligns with the analyst's expectation of a narrowing valuation gap compared to peers.
InvestingPro Tips reveal that AXIS Capital has raised its dividend for 21 consecutive years and has maintained dividend payments for 22 consecutive years. This consistent dividend history, coupled with a current dividend yield of 2.2%, underscores the company's financial stability and commitment to shareholder returns.
The company's profitability is evident from its positive net income and the expectation of growth this year. This is reflected in the revenue growth of 6.37% over the last twelve months and a more impressive 12.33% growth in the most recent quarter. These figures support the analyst's optimistic outlook on AXIS Capital's future performance.
For investors seeking more comprehensive insights, InvestingPro offers 12 additional tips for AXIS Capital, providing a deeper understanding of the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.