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On Wednesday, Keefe, Bruyette & Woods adjusted their outlook on Fidelis Insurance Holdings (NYSE:FIHL), reducing the price target from $25.00 to $22.00 while still maintaining an Outperform rating. The revision follows Fidelis’s announcement of a substantial fourth-quarter reserve charge and projected losses from California wildfires.
Meyer Shields of Keefe, Bruyette & Woods noted that Fidelis Insurance Holdings disclosed a net reserve charge of approximately $287.2 million, or about $2.21 per share after tax, for the fourth quarter of 2024. This charge is due to aircraft that remain grounded in Russia. Consequently, Fidelis now expects its full-year 2024 operating net income to be between $120 million and $140 million. This forecast suggests a loss per share for the fourth quarter of 2024 ranging from $1.05 to $1.23, which contrasts with the prior consensus estimate of a gain of $0.84 and Keefe, Bruyette & Woods’ earlier projection of a $0.76 increase.
Adding to the company’s challenges, Fidelis preannounced estimated losses stemming from the first-quarter 2025 California wildfires. These losses are projected to be in the range of $160 million to $190 million, equating to approximately $1.20 to $1.43 per share after tax, and represent 5.4% to 6.4% of the firm’s estimated fourth-quarter 2024 shareholder equity.
In light of these developments, Shields has revised the earnings per share (EPS) estimates for Fidelis for the years 2024, 2025, and 2026. The new EPS forecasts stand at $1.12, $2.60, and $3.95 respectively, down from the previous estimates of $2.95, $3.60, and $4.20. These updated figures include the preannounced losses and incorporate a higher predicted catastrophe load for 2026.
The revised price target of $22.00 represents 88% of Keefe, Bruyette & Woods’ projected year-end 2025 book value per share (BVPS) and is 5.6 times the firm’s updated EPS estimate for 2026. Despite the lowered price target and revised earnings forecasts, Keefe, Bruyette & Woods continues to recommend Fidelis Insurance Holdings as an Outperform-rated stock.
In other recent news, Goldman Sachs has downgraded Fidelis Insurance Holdings from Neutral to Sell, adjusting the price target from $21.00 to $16.00. This change indicates a potential downside for the company, as analysts at Goldman Sachs foresee a challenging period ahead. The downgrade is influenced by Fidelis’s significant exposure to declining property Catastrophe pricing, which comprises nearly its entire business portfolio. Goldman Sachs projects a total return opportunity of -3% for Fidelis, considerably lower than the average return for insurers covered by the firm. Additionally, earnings projections for 2026/2027 are expected to be 2% below Visible Alpha Consensus expectations. Concerns were also raised about the company’s long-term Return on Equity guidance, which Goldman Sachs considers optimistic. The company’s short-duration investment portfolio is seen as less favorable compared to other underwriters. Despite trading at a discount, the outlook remains cautious due to the volatility of earnings and risks associated with Fidelis’s business mix.
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