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On Friday, Jefferies analyst Andrew Andersen upgraded Everest Group (NYSE:EG) stock from Hold to Buy and increased the price target to $415 from $376. Currently trading at $341.40, the stock is near its 52-week low of $320. According to InvestingPro analysis, Everest Group appears slightly undervalued based on its Fair Value assessment. Andersen cited valuation as a key driver for the upgrade, noting that the stock's current levels present a favorable risk/reward scenario.
Everest Group's stock is currently trading at 1.08x price-to-book (P/B) with a 10% return on equity (ROE). InvestingPro data shows the company maintains a "GOOD" overall financial health score of 2.87, with particularly strong scores in cash flow (3.28) and relative value (3.25). Andersen believes this valuation, combined with conservative growth modeling and expectations of only minor underlying margin improvement, makes the stock an attractive buy. Get access to 8 more exclusive InvestingPro Tips and comprehensive financial metrics with an InvestingPro subscription.
The analyst highlighted several factors that contribute to the attractiveness of Everest Group in a risk-off market, including its low relative valuation, high repurchase volume in the near term, and the low-beta nature (0.43) of its reinsurance business. The company has maintained dividend payments for 31 consecutive years, with a current yield of 2.34% and recent dividend growth of 14.29%. These elements are seen as providing a stable investment opportunity.
Andersen also pointed out that the insurance sector's premium and margin estimates are nearing their lowest point following the fourth quarter of 2024's reserve study. He anticipates that actions taken by management throughout 2024 may create growth headwinds in 2025. However, these actions are expected to lead to stronger reserve adequacy and improvements in growth and margins into 2026 and 2027.
In the immediate future, Andersen expects investors to place a higher value on pricing discipline and future reserve adequacy over growth. With analysts projecting EPS of $47.80 for FY2025 and a consensus recommendation of 2.42, this strategic focus is anticipated to support Everest Group's performance in the market. Access the complete Pro Research Report and detailed financial analysis for Everest Group and 1,400+ other stocks on InvestingPro.
In other recent news, Everest Group has announced a leadership transition with Joseph V. Taranto set to retire as Chairman in May 2025, to be succeeded by John Graf. Additionally, the company has appointed John Howard as an independent, non-executive member of its Board of Directors, bringing extensive industry experience to the role. In financial developments, Everest Group's Compensation Committee has approved significant compensation changes for top executives, including restricted stock awards for CEO Jim Williamson and CFO Mark Kociancic, as well as an increase in Kociancic's target annual incentive bonus.
Analyst opinions on Everest Group have varied, with Keefe, Bruyette & Woods maintaining an Outperform rating, citing an overstatement in reserves and projecting earnings per share of $49.05 for 2025 and $62.40 for 2026. Conversely, Morgan Stanley (NYSE:MS) downgraded the stock from Overweight to Equalweight, adjusting the price target to $340, following a $1.7 billion reserve charge announcement. Morgan Stanley's analysts have expressed concerns about Everest Group's growth prospects, particularly in the US casualty and reinsurance segments. These recent developments provide investors with insights into Everest Group's strategic and financial trajectory.
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