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Investing.com - Goldman Sachs initiated coverage on AXIS Capital (NYSE:AXS) with a Neutral rating and a price target of $104.00 on Tuesday. The insurance company, currently trading at $97.34 with a market capitalization of $7.61 billion, shows an attractive P/E ratio of 9.38x. According to InvestingPro analysis, the stock appears slightly undervalued based on its Fair Value model.
The investment bank cited its view that the current valuation fully reflects AXIS Capital’s position as a company with a peak market mid-teens ROE profile that faces underappreciated margin compression risks.
Goldman Sachs acknowledged AXIS Capital has structurally improved its business by exiting non-core underperforming reinsurance segments while enhancing operating efficiency to better align with outperforming peers.
Despite these improvements, the firm identified remaining structural challenges including less leverage on investment and underwriting portfolios compared to North American Commercial peers, along with outsized exposure to MGAs, Lloyd’s, and Long-Tail Reinsurance that will place downward pressure on multiples.
Goldman Sachs projects the insurance segment’s underlying combined ratio will compress by approximately 2 percentage points to 86.2% between 2025 and 2027, representing the most significant absolute margin deterioration within their coverage group compared to street estimates of 83.4%.
In other recent news, AXIS Capital Holdings Limited reported a strong earnings performance for Q2 2025, with earnings per share of $3.29, surpassing analysts’ expectations of $2.93. The company also declared a quarterly dividend of $0.44 per common share, payable on October 17, 2025. Additionally, AXIS Capital announced a dividend of $34.375 per Series E 5.50% preferred share, equivalent to $0.34375 per depositary share, with the same payment and record dates as the common share dividend. The Board of Directors approved a $400 million share buyback, reflecting confidence in the company’s financial position.
Meanwhile, Ryan Specialty launched a new collateralized reinsurance vehicle, Ryan Alternative Capital Re, Ltd. (RAC Re), in partnership with Flexpoint Ford and Sixth Street. This initiative raised approximately $400 million in committed capital and is expected to provide Ryan Specialty Underwriting Managers with $900 million in multi-year premium capacity. These developments highlight significant strategic moves within both companies in the reinsurance sector.
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