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On Friday, JMP Securities analyst Matthew Carletti increased the price target for HCI Group (NYSE:HCI) to $210.00, up from the previous $165.00, while maintaining a Market Outperform rating on the stock. The adjustment follows HCI Group’s first-quarter earnings for 2025, which surpassed analyst expectations. The stock, currently trading at $154.87, has shown remarkable momentum with a 33.35% gain year-to-date and is approaching its 52-week high of $155.19. According to InvestingPro, two analysts have recently revised their earnings estimates upward for the upcoming period.
HCI Group reported an operating earnings per share (EPS) of $5.21, outperforming JMP Securities’ estimate of $4.75 and the consensus estimate of $4.85. The company’s net loss ratio showed a significant improvement, coming in at 30% versus the estimated 42%. This improvement was attributed to a decrease in claims, driven by favorable weather conditions and a reduction in litigation frequency. However, this was somewhat balanced by a rise in the expense ratio, which reached 27% compared to the estimated 22%, and a slight shortfall in net investment income (NII), which was $14 million against an expected $15 million. The company maintains strong fundamentals with a 20.95% revenue growth and an impressive Financial Health Score of "GREAT" on InvestingPro, which offers comprehensive analysis of over 1,400 US stocks through its Pro Research Reports.
Gross written premium (GWP) growth for HCI Group was robust, although it slightly missed projections, with a 13% increase compared to the estimated 15%. Despite this, the growth was still considered strong by the analyst.
Carletti’s new price target of $210 is based on 13 times the estimated EPS for 2026 and 3.1 times the firm’s forward book value estimate. The analyst believes these multiples are conservative for HCI Group, especially considering the company’s plans to spin off its high-growth fee-generating business and maintain its legacy underwriting operations, which are expected to continue delivering leading returns on equity (ROEs) and strong growth.
The positive outlook on HCI Group is further supported by a detailed sum-of-the-parts scenario analysis provided by JMP Securities, which underscores the analyst’s view that the shares are currently undervalued.
In other recent news, HCI Group Inc. reported a strong first quarter for 2025, exceeding earnings expectations with an EPS of $5.35, compared to the forecasted $4.83. The company also saw a 17% year-over-year increase in gross earned premiums, reflecting a solid market position. Shareholder equity rose by nearly $70 million during the quarter, and the company reported a pretax net income of $100 million. HCI Group is planning a strategic spin-off of its Exeo technology platform, with expectations to complete the transaction by the end of the year. The spin-off aims to allow Exeo to operate as a standalone company, potentially unlocking further growth opportunities. Analysts from firms like Truist and Oppenheimer have noted the potential benefits of this move. Furthermore, HCI Group anticipates a strong financial position, with shareholder equity projected to reach $750 million by the end of Q2.
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