AXIS Capital upgraded to Equal Weight with improved growth outlook for 2025

On Wednesday, Wells Fargo (NYSE:WFC) made a notable adjustment to its outlook on AXIS Capital Holdings Limited (NYSE:AXS), shifting the stock's rating from Underweight to Equal Weight.

Accompanying this upgrade, the firm also increased the price target to $89.00, up from the previous $78.00. According to InvestingPro data, AXS has demonstrated remarkable strength with a 65% return over the past year, while currently trading at an attractive P/E ratio of 12.3.

The revision in rating and price target comes as the analyst anticipates AXIS Capital to gain from an expected upswing in the casualty insurance sector in 2025. According to the firm, the insurer is well-positioned to reap the benefits of this trend due to its significant presence in the casualty and specialty lines market, which accounts for roughly 80% of its business.

The company's strong market position is reflected in its "GOOD" overall financial health score from InvestingPro, which considers multiple financial metrics and growth indicators.

Moreover, the analyst predicts that the reserve conditions that have been a concern will start to clear as the company proceeds with its intensive annual review in the fourth quarter. These conditions have been under scrutiny due to social inflation and concerns about reserve adequacy across the industry.

AXIS Capital has been proactive throughout 2024, strategically refining its primary casualty portfolio. This effort is seen as a step towards achieving stronger growth in 2025. The insurance company's strategic adjustments and the steady increase in casualty rates over the past quarters, as the property segment experiences slower growth, provide a supportive backdrop for the upgraded rating and price target.

The insurance sector closely monitors rate movements, and AXIS Capital's focus on casualty and specialty lines places it in a favorable position to benefit from these industry dynamics. The firm's enhanced outlook reflects confidence in AXIS Capital's strategic direction and its potential for improved performance in the near future.

With a 21-year track record of consecutive dividend increases and management actively buying back shares, AXIS Capital demonstrates strong shareholder commitment. For deeper insights into AXIS Capital's valuation and growth prospects, investors can access comprehensive analysis and 13 additional ProTips through InvestingPro's detailed research reports.

In other recent news, AXIS Capital has seen significant growth in Q3 2024, with a reported annualized return on equity (ROE) of 17.3% and a 26% increase in book value per share compared to the same period last year.

The company's strategic measures resulted in profitable growth in both insurance and reinsurance segments, recording a peak in third-quarter gross premiums written at $1.9 billion. AXIS Capital's net income reached $173 million, equivalent to $2.04 per diluted share, and a consolidated combined ratio of 93.1% was achieved.

TD Cowen recently adjusted its outlook on AXIS Capital, increasing the price target to $127.00 from the previous $118.00, while maintaining a Buy rating on the stock. This adjustment followed a meeting with AXIS Capital's management team, where discussions revolved around the company's confidence in its underwriting capabilities and reserve strength.

The company is on track to complete the reshaping of its primary casualty book by year's end and expects potential growth opportunities in 2025. TD Cowen's revised price target reflects their confidence in AXIS Capital's future performance and potential for growth.

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