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Investing.com - BMO Capital lowered its price target on Accelerant Holdings (NYSE:ARX) to $22.50 from $34.00 on Wednesday, while maintaining an Outperform rating on the stock. The adjustment comes as the $4.42 billion market cap company’s shares have declined 24.23% year-to-date, currently trading at $20.08.
The firm cited concentration risk as the primary reason for the significant price target reduction, prompting a shift in its valuation methodology. According to InvestingPro data, the company maintains strong financial health with a current ratio of 30.34, indicating robust liquidity despite recent market challenges. Get access to 8 more exclusive InvestingPro Tips and comprehensive valuation tools to better understand ARX’s true value potential.
BMO Capital has moved to a sum-of-the-parts valuation approach, which values a portion of Accelerant Holdings using carrier multiples, rather than relying fully on insurance broker/distributor multiples as it had previously done.
The research firm also examined the profile of Accelerant’s revenue base, noting that while it consists of small commercial insurance policies, the revenue appears somewhat chunkier and more concentrated.
This concentration is attributed to dynamics related to the mode of distribution, according to BMO Capital’s analysis of the insurance company’s business model.
In other recent news, Accelerant Holdings reported strong financial results for the second quarter of 2025, showcasing significant growth. The company achieved a 68% increase in total revenue, reaching $219 million, which surpassed market expectations. Earnings per share were reported at $0.04, reflecting robust performance. Despite this positive earnings report, the stock experienced a decline of more than 20%, yet BMO Capital reiterated an Outperform rating with a $34.00 price target. BMO Capital noted that Accelerant’s key performance indicators and guidance for the second and third quarters exceeded their estimates, describing it as a "solid print." These developments indicate that the company is performing well financially, even as market reactions remain mixed.
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