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Monday, shares of Munich Re experienced a change in their stock rating as Goldman Sachs downgraded the company’s shares from Buy to Neutral. The adjustment comes despite a slight increase in the price target, which was raised to EUR573.00 from the previous EUR562.00. This move reflects a shift in perspective from the firm’s analysts following Munich Re’s significant share price increase since September 2024.
Stifel analysts observed that since their initial Buy rating on Munich Re in September 2024, the company’s shares have risen approximately 20%, notably outperforming the FTSE World Europe by approximately 12 percentage points. This surge was largely attributed to a strong earnings outlook for 2025 and the potential for capital returns. However, the analysts now believe that the prospects for further capital return discussions will likely be postponed until at least the company’s Capital Markets Day in December 2025.
The revised price target represents about a 2% increase from the previous target, influenced by a modest reduction in the cost of equity as per the analysts’ evaluation. Despite this increase, the downgrade to Neutral was prompted by the analysts’ earnings per share (EPS) estimates aligning closely with the Visible Alpha Consensus Data. Additionally, Munich Re’s current valuation appears more stretched when analyzed both as a standalone entity and in comparison to its peer, Hannover Re (OTC:HVRRY).
Goldman Sachs’ assessment indicates that while Munich Re has had a robust performance and still possesses capital return potential, the current valuation and consensus on earnings expectations suggest limited upside at present. This repositioning by Goldman Sachs may influence investor sentiment as they consider the company’s future performance and market positioning relative to its competitors.
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