On Monday, Barclays (LON:BARC) analyst Alex Scott upgraded Hartford Financial (NYSE:HIG) Services stock, trading on the New York Stock Exchange under the ticker NYSE:HIG, from Equal Weight to Overweight. Accompanying the upgrade, Scott set a price target for the company's shares at $135.00. The stock, which has delivered an impressive 34.5% return over the past year, is currently trading near its Fair Value according to InvestingPro analysis. With 8 additional ProTips available, investors can access comprehensive valuation metrics and analysis through InvestingPro's detailed research reports.
The upgrade comes with a positive outlook on the company's performance, particularly in the commercial property and casualty (P&C) segment. Scott noted that pricing has been most favorable in the small to mid-sized segment of commercial P&C. This positions Hartford Financial Services advantageously relative to its peers, potentially leading to a favorable price versus loss cost trend.
Despite potential concerns around General Liability reserves and the annual fourth-quarter asbestos and environmental (A&E) review, Scott anticipates that any issues might be mitigated by favorable workers' compensation reserve releases. This could provide some balance to the company's financials.
In the Personal Insurance sector, Hartford is expected to continue its margin improvement trend. Scott forecasts that the segment will deliver a combined ratio of 96.8% for the year 2025, an improvement from the +100% combined ratios experienced over the previous three years. This improvement is attributed to the auto and homeowners products benefiting from double-digit Renewal Premium increases.
Additionally, the Group Benefits sector is projected to maintain core margins around 8%, surpassing the long-term target of 6-7% for 2025. This optimism is based on anticipated strong premium and fee growth within the sector. These factors combined provide a positive outlook for Hartford Financial Services, as reflected in the analyst's upgraded rating and price target. The company has demonstrated commitment to shareholder returns, having raised its dividend for 12 consecutive years, with a current yield of 1.9%.
For deeper insights into Hartford's financial metrics and growth potential, investors can access the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Hartford Financial Services reported robust third-quarter results, with core earnings reaching $752 million and an earnings per share of $2.53, despite challenges posed by Hurricanes Milton and Helene. The company also reported a 17.4% return on equity for the trailing 12 months. Additionally, Hartford Financial noted a 9% increase in Commercial Lines top-line growth, a 12% rise in Personal Lines and an 11% dividend increase.
BMO Capital Markets raised the price target for Hartford Financial Services to $141.00, maintaining a Market Perform rating. The firm's assessment reflects confidence in Hartford's ability to maintain strong profit margins in its workers' compensation insurance segment, despite ongoing pricing pressures.
On the other hand, Jefferies slightly adjusted Hartford Financial Services' price target to $126.00, maintaining a Hold rating on the stock. The change followed the company's third-quarter earnings, which fell short of Jefferies' and consensus expectations due to a higher loss ratio in the Commercial Property & Casualty segment.
Despite these challenges, Hartford Financial remains optimistic about future growth, with the company on track to meet its $300 million goal for Excess & Surplus binding by year-end. However, the company reported a higher loss ratio in global reinsurance due to losses in Latin America and weak sales growth in Group Benefits.
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