Arch Capital stock rating reiterated at Market Outperform by Citizens

Investing.com - Citizens has reiterated its Market Outperform rating on Arch Capital (NASDAQ:ACGL), a $34.29 billion market cap insurer, with a price target of $125.00. Currently trading at $92.25, InvestingPro analysis suggests the stock is undervalued.

The firm highlighted Arch Capital’s "very strong balance sheet" - reflected in its GREAT financial health score and impressive 23.79% revenue growth - and described the company as "superb at managing through the cycle," noting that it is currently "leaning into casualty and moderating property."

Citizens analyst Matthew Carletti recommended that investors focus on companies with strong balance sheets amid continued interest rate uncertainty, growing pricing pressure in certain property markets, and persistent casualty loss cost inflation.

The firm suggested investors should seek companies with earnings streams leveraged to both underwriting results and investment income, particularly those with longer-duration portfolios that will benefit longer from recent interest rate rises if rates decline.

Arch Capital was specifically identified as a company in Citizens’ coverage universe that meets these criteria, positioning it well to navigate current market conditions.

In other recent news, Arch Capital Group reported its second-quarter 2025 earnings, revealing an earnings per share (EPS) of $2.58, which exceeded the forecasted $2.30. Despite this earnings beat, the company’s stock saw a minor decline in after-hours trading. Additionally, Arch Capital announced a significant increase in its share repurchase program by $2 billion, bringing the total authorization for repurchases to approximately $2.3 billion as of early September 2025. This move allows the company flexibility in executing share repurchases based on market conditions.

On the analyst front, Goldman Sachs initiated coverage on Arch Capital with a Sell rating, citing the company’s "structurally weaker positioning versus peers." The investment bank highlighted Arch Capital’s relatively low investment and premium leverage as factors contributing to its bearish outlook. The company, which is part of the S&P 500 Index, stated that the timing and amount of share repurchases would depend on market and regulatory considerations. These developments reflect the company’s strategic financial maneuvers and the mixed perspectives from financial analysts.

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