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Friday, Keefe, Bruyette & Woods analysts increased their price target on Palomar Holdings stock (NASDAQ:PLMR) to $155.00 from $152.00, while retaining an Outperform rating on the shares. The revision followed a comprehensive investor day presentation that detailed Palomar’s strategy and future growth prospects.
The analysts highlighted the "Multiple Growth Engines Support Compelling Palomar 2X Strategy" in their assessment. They expressed confidence in Palomar’s ability to double its adjusted underwriting profit and now its adjusted net income within an intermediate timeframe, typically spanning 3-5 years. This confidence appears well-founded, as InvestingPro data reveals impressive revenue growth of 47.33% over the last twelve months, with the company maintaining a strong financial health score of 3.59 (GREAT).
Palomar Holdings’ investor day event, held on Thursday, provided an extensive overview of the company’s capabilities. The analysts believe these capabilities position the company well to achieve the ambitious Palomar 2X plan. This strategy aims to double key financial metrics and enhance shareholder value over the coming years. The company’s track record supports this ambition, with InvestingPro showing a remarkable 58.93% return over the past year and current diluted earnings per share of $4.48.
In response to the company’s forward-looking statements and financial targets, Keefe, Bruyette & Woods analysts adjusted their 2025 and 2026 earnings per share (EPS) estimates to $6.50 and $8.00, respectively. This adjustment is based on expectations of increased earned premium, largely due to higher premium retention rates, and higher investment income.
The new price target of $155 reflects the analysts’ updated discounted cash flow (DCF) analysis. The DCF analysis is a valuation method used to estimate the value of an investment based on its expected future cash flows. This method of valuation takes into account the time value of money, with future cash flows being discounted to present value. The analysts’ decision to raise the price target is indicative of their belief in Palomar’s strong financial outlook and potential for growth.
In other recent news, Palomar Holdings reported its fourth-quarter 2024 earnings, exceeding analyst expectations with an earnings per share (EPS) of $1.52, compared to the forecasted $1.22. However, the company’s revenue was slightly below expectations at $373.7 million against a forecast of $377.97 million. Palomar’s adjusted net income for 2024 grew by 43% year-over-year, reaching $133.5 million. In a strategic move, Palomar announced its acquisition of Advanced AgProtection, a Texas-based Crop Managing General Agent, to expand its crop insurance portfolio. This acquisition is expected to close in the second quarter of the year and is part of Palomar’s strategy to enhance its position in the specialty insurance market.
Keefe, Bruyette & Woods (KBW) maintained an Outperform rating on Palomar Holdings, raising the stock’s price target to $152.00, up from $136.00. The firm emphasized Palomar’s solid growth and favorable property underwriting environment as key factors supporting this decision. KBW analysts also revised their earnings per share estimates for Palomar, projecting $6.45 for 2025 and $7.90 for 2026, anticipating continued rapid and profitable premium growth. Palomar’s positive reserve development, as noted by KBW, suggests conservative financial management, which could potentially lead to future earnings if reserves are released. These recent developments reflect Palomar’s ongoing strategic initiatives and robust operational execution.
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