On Thursday, Morgan Stanley (NYSE:MS) initiated coverage on W.R. Berkley Corporation (NYSE:WRB), assigning an Equalweight rating to the stock with a price target of $65.00, close to its 52-week high of $65.49.
The firm highlighted the insurance company's structure, consisting of over 60 independent operating units, which allows for a swift response to market changes and a deep understanding of client needs and risk profiles.
According to InvestingPro analysis, WRB maintains a "GREAT" financial health score and appears undervalued based on its Fair Value assessment.
The analyst noted that W.R. Berkley's insurance segment, which represents approximately 88% of the total nearly $11.0 billion in net written premiums (NWP) as of the end of 2023, primarily underwrites commercial lines on a global scale. This includes excess and surplus (E&S), admitted, and specialty personal lines.
The report projects that the specialty and E&S spaces will experience accelerated growth, driven by factors such as weather-related risks and social inflation. For W.R. Berkley's insurance segment, the analyst anticipates net written premium growth of 8.5% for 2025 and 6.0% for 2026. Additionally, the combined ratios for both years are expected to be 91.9%, assuming there are no adverse prior year development (PYD) effects.
The Equalweight rating suggests that Morgan Stanley views W.R. Berkley's stock performance to be in line with the average returns of the stocks the analyst covers within the same sector. The $65.00 price target is set based on the firm's evaluation of the company's future financial performance and market conditions.
In other recent news, W.R. Berkley Corporation reported a nearly 10% increase in net income, reaching a record $366 million in Q3 2024. The company's operating earnings surpassed the Visible Alpha Consensus estimate of $0.91, coming in at $374 million, or $0.93 per share. However, net premium written growth fell short of analyst forecasts, registering around 7% growth compared to the expected 10%.
Goldman Sachs upgraded W.R. Berkley stock from Neutral to Buy, citing the company's ability to secure pricing above the claim cost trend. The firm also expects W.R. Berkley to continue benefiting from a strong casualty pricing environment into 2025. Other analyst firms like CFRA and TD Cowen also maintained a Buy rating, while Keefe, Bruyette & Woods and RBC Capital Markets adjusted their price targets.
W.R. Berkley's strong presence in the Excess & Surplus (E&S) market, where the company generates approximately 40% of its premiums, is expected to contribute to improved premium growth estimates. The company projects an annual revenue growth of 10% to 15% and anticipates sustained growth in underwriting margins and investment income.
However, Evercore ISI expressed skepticism about W.R. Berkley achieving its growth target in the upcoming quarter, aligning more with a conservative growth outlook. These are some of the recent developments for W.R. Berkley Corporation.
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