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Investing.com - RBC Capital has lowered its price target on Beazley PLC (LON:BEZ) (OTC:BZLYF) to GBP10.00 from GBP11.25 while maintaining an Outperform rating on the stock.
The price target reduction reflects RBC’s increased caution on the combined ratio and lower annual top-line growth expectations, resulting in low-teen percentage cuts to future earnings forecasts.
RBC Capital noted that competition is increasing and margins are normalizing in the insurance sector, highlighting the high operational gearing in Beazley’s business model.
The firm suggested that mergers and acquisitions could potentially support organic growth for Beazley, which is becoming more difficult to achieve, though possibly at a marginal cost to tangible net asset value.
Despite the lowered price target, RBC maintained its Outperform rating, citing Beazley’s strong starting solvency position which supports an expected $500 million in annual share buybacks, representing approximately 11% total capital return over the next 12 months.
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