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Investing.com - CFRA has reduced its price target on Arch Capital (NASDAQ:ACGL) to $103.00 from $110.00 while maintaining a Strong Buy rating on the insurance company’s stock. The new target still represents over 21% upside from the current price of $84.98, with InvestingPro data showing the stock is trading significantly below its Fair Value.
The price target adjustment comes after Arch Capital reported third-quarter earnings per share of $2.77, significantly exceeding both CFRA’s estimate of $1.78 and the consensus expectation of $2.25. This strong performance aligns with InvestingPro data showing 10 analysts have revised their earnings estimates upward for the upcoming period.
The strong quarterly performance reflected 7.6% higher operating revenues driven by 8% growth in earned premiums, a 2.3% increase in investment income, and higher other underwriting income. Underwriting results benefited from an 8.4% decrease in loss costs, partially offset by 15% higher acquisition expenses. Over the last twelve months, Arch Capital has achieved impressive 15.9% revenue growth, reaching $19.54 billion.
CFRA has raised its 2025 earnings per share estimate for Arch Capital by $0.94 to $9.24 and projects operating revenue growth of 13%-18% in 2025 and 8%-15% in 2026, despite noting a more competitive reinsurance pricing and demand environment. The company’s trailing twelve-month diluted EPS stands at $10.67, reflecting its strong profitability.
The new price target values Arch Capital at 10 times CFRA’s newly initiated 2027 operating EPS estimate of $10.30 and at 10.4 times its 2026 EPS estimate of $9.90, compared to the company’s three-year average forward multiple and the peer average of 11 times. Currently trading at a P/E ratio of just 7.98, Arch Capital appears attractively valued according to InvestingPro, which rates the company’s overall financial health as "GREAT" with a score of 3.11. Investors can access the comprehensive Pro Research Report for Arch Capital, one of 1,400+ US equities covered in-depth on InvestingPro.
In other recent news, Arch Capital Group Ltd. reported its third-quarter 2025 earnings, which exceeded market expectations. The company achieved an earnings per share of $2.77, surpassing the projected $2.23. However, Arch Capital’s revenue came in at $3.96 billion, falling short of the anticipated $4.51 billion, marking a 12.2% underperformance. Despite the earnings beat, the revenue miss presents a mixed picture for investors. Additionally, there were no significant updates regarding mergers or acquisitions involving Arch Capital in the latest reports. Analyst reactions to these earnings results have not been specified in the current context. Investors might keep an eye on further updates from firms like Arch Capital for any potential revisions in their outlook.
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