Citizens reaffirms Arch Capital stock rating with $125 price target

Investing.com - Citizens analyst reiterated a Market Outperform rating and $125.00 price target on Arch Capital (NASDAQ:ACGL), currently trading at $85.94, following the company’s better-than-expected third-quarter 2025 results. According to InvestingPro analysis, the company appears undervalued, with multiple indicators suggesting growth potential.

The price target represents approximately 1.8 times forward book value and about 14 times estimated 2026 earnings per share, according to the research note. Currently trading at a P/E ratio of 8.87 and delivering an impressive 23.79% revenue growth, Arch has demonstrated strong financial performance. Citizens views Arch as a "best-in-class company" that deserves a premium valuation due to consistently strong operating results and proactive cycle management. InvestingPro data reveals 11 additional key insights about ACGL’s market position and growth prospects.

The firm noted that Arch’s core property and casualty insurance and reinsurance businesses remain in a strong position as hard market conditions persist, with casualty lines remaining firm while certain property lines moderate. Citizens believes Arch is positioned to be one of the biggest beneficiaries of the P&C hard market given its global distribution network and underwriting expertise.

The research highlighted that Arch’s management has consistently recognized market improvements early and "leaned in hard," putting the company in a better position to grow and gain market share over several renewal periods compared to many peers.

Citizens also expressed confidence in Arch’s balance sheet strength, particularly regarding loss reserves, describing the company as "amongst the best positioned, with conservative loss picks and superb cycle management" that has resulted in writing less casualty business during soft market years than during hard markets.

In other recent news, Arch Capital Group reported its second-quarter 2025 earnings, with earnings per share (EPS) coming in at $2.58, surpassing the analysts’ forecast of $2.30. In a strategic move, Arch Capital Group has increased its share repurchase authorization by $2 billion, bringing the total available for share repurchases to approximately $2.3 billion as of September 4, 2025. This decision allows the company flexibility in executing repurchases through open market or privately negotiated transactions, influenced by market conditions and regulatory considerations.

In terms of analyst ratings, Citizens has reiterated its Market Outperform rating for Arch Capital, setting a price target of $125.00. The firm emphasized the company’s strong balance sheet and adept management through market cycles. Conversely, Goldman Sachs initiated coverage with a Sell rating, citing Arch Capital’s weaker positioning compared to its peers, particularly in investment leverage and its mortgage book. These contrasting analyst opinions reflect differing perspectives on the company’s financial positioning and future prospects.

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