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Investing.com - Keefe, Bruyette & Woods raised its price target on Arch Capital (NASDAQ:ACGL) to $103.00 from $102.00 on Thursday, while maintaining a Market Perform rating on the stock.
The firm’s decision follows meetings with Arch Capital’s CFO Francois Morin and IR Head Vinay Misquith, which reinforced KBW’s confidence in the profitability of current pricing and management’s approach to cycle and capital management. The company’s strong financial position is reflected in its "GREAT" Financial Health Score on InvestingPro, with impressive revenue growth of 23.79% over the last twelve months.
KBW expressed optimism about the long-term upside potential from Arch Capital’s recent MidCorp acquisition, noting that the company is expected to generate "considerable shareholder value over time."
The Market Perform rating reflects KBW’s expectation of near-term margin pressure from the MidCorp acquisition and the "likely-enduring lower multiple" that investors will pay for property catastrophe reinsurance profits.
The new price target of $103 is based on 11.0 times KBW’s updated 2026 earnings per share estimate for Arch Capital.
In other recent news, Arch Capital Group reported second-quarter earnings that exceeded analyst expectations. The company posted adjusted earnings of $2.58 per share, surpassing the consensus estimate of $2.30. Revenue came in at $4.35 billion, slightly above the projected $4.34 billion. This strong performance was driven by solid underwriting results across its insurance, reinsurance, and mortgage segments. Arch Capital achieved a 22.9% annualized net income return on average common equity.
Additionally, JMP Securities has reiterated its Market Outperform rating on Arch Capital, maintaining a price target of $125.00. JMP considers Arch Capital a "best-in-class company" and believes it merits a premium valuation. The price target represents 1.8 times forward book value and approximately 14 times the estimated earnings per share for 2026. These developments highlight the company’s strong operational results and proactive management strategies.
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