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On Thursday, BMO Capital Markets updated its outlook on Travelers Companies Inc (NYSE:TRV), with analyst Michael Zaremski increasing the price target to $297 from the previous $275. The firm has kept an Outperform rating on the insurance giant's stock, which currently trades at $241.51 with a market capitalization of $54.75 billion. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value metrics, with a notably low P/E ratio of 10.92.
Zaremski's revision reflects an optimistic view on the company's future performance. The adjustment in the price target is attributed to an anticipated rise in investment income and an improvement in profit margins. These positive factors are seen to be slightly offset by the expectation of higher catastrophe losses. InvestingPro data supports this optimistic outlook, highlighting Travelers' perfect Piotroski Score of 9 and an overall "GREAT" financial health rating of 3.19.
The analyst points out that the revised estimates are currently approximately 4% higher than the 2025 consensus. However, Zaremski anticipates that as consensus estimates adjust to account for Travelers' exposure to California wildfires, which is currently perceived as underrepresented, the figures will align more closely with BMO's projections.
BMO's forecast for the catastrophe loss ratio is set at about 9.3%, which is an increase from the current consensus of around 8.3%. This adjustment is to fully incorporate the company's exposure to potential losses from California wildfires into the financial expectations.
Looking ahead to 2026, BMO's earnings per share (EPS) estimates for Travelers are approximately 8% above the consensus. This suggests that the firm expects the company to outperform market expectations in the coming years. The analyst's commentary indicates a belief in Travelers' ability to navigate the challenges and capitalize on the opportunities ahead. This positive outlook is further reinforced by InvestingPro data showing 8 analysts revising their earnings upward for the upcoming period. For deeper insights into Travelers' valuation and growth potential, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Travelers Companies Inc. reported strong Q4 results, surpassing analyst expectations with core earnings of $9.15 per share and revenue of $12.01 billion. The company's combined ratio improved to 83.2%, indicating higher underlying underwriting gains across all segments. Furthermore, the insurer registered a 7% year-over-year growth in net written premiums, totaling $10.74 billion.
Travelers also reported a record core income for the quarter at $2.1 billion, driven by robust growth in earned premiums and profitability. For the full year of 2024, the company achieved a core income of $5.03 billion, marking a 64% increase from 2023, and grew its adjusted book value per share by 13% to $139.04.
In terms of analyst actions, RBC Capital cut Travelers' stock price target to $268, while Evercore ISI raised it to $288. Keefe, Bruyette & Woods maintained a Market Perform rating with a price target of $268. However, BofA revised Travelers' stock price target to $235, maintaining an underperform rating, while JPMorgan increased its price target to $260, keeping an underweight rating. These are the recent developments concerning Travelers Companies Inc.
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