On Thursday, Keefe, Bruyette & Woods made an adjustment to the price target of CNA Financial (NYSE:CNA), increasing it to $55.00 from the previous $54.00. The firm maintained a Market Perform rating on the insurance company's shares. This change reflects the analyst's perspective following CNA Financial's third-quarter 2024 results and the subsequent conference call.
The firm has updated its earnings per share (EPS) estimates for CNA Financial for the years 2024, 2025, and 2026. The new EPS forecasts are set at $4.65 for 2024, $5.55 for 2025, and $5.90 for 2026. These figures have been adjusted from the previous estimates of $4.85 for 2024, $5.45 for 2025, and $5.85 for 2026.
The revision of the 2024 EPS estimate downward primarily reflects the company's third-quarter performance, which did not meet the analyst's expectations.
The analyst's commentary sheds light on the reasoning behind the adjustments. The higher EPS estimates for the years 2025 and 2026 are based on the anticipation of increased investment income and reduced expense ratios. However, these positive factors are partly counterbalanced by expectations of higher core loss ratios and a decrease in Life & Group income.
CNA Financial's current valuation was also a topic of discussion. The company is trading at 8.8 times the firm's projected 2025 EPS. According to the analyst, this valuation fairly represents the balance between CNA Financial's near-term EPS growth potential and the challenges it faces, such as reserve-related concerns and the enduring issues associated with long-term care.
InvestingPro Insights
To complement the analyst's perspective on CNA Financial, recent data from InvestingPro offers additional insights into the company's financial health and market position. CNA's P/E ratio stands at 10.2 for the last twelve months as of Q3 2024, which aligns with the analyst's observation of the company trading at 8.8 times projected 2025 EPS. This relatively low P/E ratio is further supported by an InvestingPro Tip indicating that CNA is "Trading at a low P/E ratio relative to near-term earnings growth."
Investors may find CNA's dividend policy particularly attractive. The company boasts a significant dividend yield of 7.65% and has maintained dividend payments for 14 consecutive years, as highlighted by another InvestingPro Tip. This consistent dividend history, coupled with a robust dividend growth of 30.56% in the last twelve months, may appeal to income-focused investors.
CNA's revenue growth of 9.18% over the last twelve months and an EBITDA growth of 22.78% during the same period suggest the company is experiencing solid financial performance, which could support the analyst's optimistic EPS projections for 2025 and 2026.
For readers interested in a more comprehensive analysis, InvestingPro offers 6 additional tips for CNA Financial, providing a deeper understanding of the company's financial position and market outlook.
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