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On Monday, Jefferies made an adjustment to the financial outlook for American Financial (NYSE:AFG), reducing the price target to $131 from the previous $135 while maintaining a Hold rating on the stock. The revised target reflects a modest recalibration of expectations by the firm’s analyst, Andrew Andersen, who also made changes to the earnings per share (EPS) forecast for the year 2025. According to InvestingPro data, AFG maintains a GOOD overall financial health score and has consistently paid dividends for 40 consecutive years, with a current yield of 7.66%.
Andersen stated that the EPS estimate for 2025 has been decreased to $10.50, aligning it with the company’s guidance, though InvestingPro data shows broader analyst consensus forecasting a higher EPS of $11.41 for FY2025. The Net Premium Written (NPW) growth estimate remains steady at 5%, which is consistent with previous projections. The analyst outlined three potential factors that could lead to more optimistic results than currently expected: an improvement in crop pricing, an acceleration in casualty pricing, and continued strong releases for Workers’ Compensation (WC). InvestingPro subscribers have access to 7 additional key insights about AFG’s financial outlook.
The analyst suggested that the conservative stance at the start of the year might provide room for American Financial to outperform expectations and potentially revise forecasts upward as the year unfolds. Despite the potential for positive developments, the valuation of American Financial at 2.2 times the price-to-book (P/B) ratio was deemed to offer a balanced risk-reward scenario, leading to the decision to maintain the Hold rating.
The new price target of $131 implies an 8% total return, as per the analysis by Jefferies. This update comes as investors and stakeholders in American Financial gauge the company’s current valuation and future financial performance.
In other recent news, American Financial’s stock rating was downgraded from Outperform to Market Perform by Keefe, Bruyette & Woods (KBW). This revision was influenced by lowered earnings per share (EPS) estimates for 2025 and 2026, now set at $10.50 and $12.50, respectively. KBW cites factors such as higher catastrophe losses, rising core loss ratios, and diminishing reserve releases as reasons for the downgrade, although these are somewhat offset by a projected decrease in expense ratios. Despite these near-term challenges, American Financial’s strong underwriting capabilities are still recognized.
Simultaneously, BMO Capital Markets adjusted its price target for American Financial, raising it to $143.00. The firm’s evaluation of the company’s financial outlook through 2026, including revisions to net investment income, led to this adjustment. However, BMO maintains a cautious stance on the company’s near-term performance, particularly due to an expected increase in the underlying loss ratio for future third quarters.
These are recent developments that might have a significant impact on American Financial’s performance and the investor’s perspective. As always, investors are advised to consider these factors in conjunction with their own research and investment goals.
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