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On Monday, Keefe, Bruyette & Woods, a financial services specialist, increased the price target for Travelers Companies Inc. (NYSE:TRV) shares to $275 from the previous $268. The firm has maintained a Market Perform rating on the insurance giant's stock.
The revised price target follows Travelers' fourth-quarter earnings report for the year 2024, which was accompanied by a detailed conference call. Analysts at Keefe, Bruyette & Woods adjusted their expectations for the company's future earnings per share (EPS), citing various factors that influenced their analysis.
The firm lowered its estimated EPS for the year 2025 to $21.75, a slight decrease from the earlier projection of $22.20. This adjustment was primarily attributed to the impact of California wildfire losses in the first quarter of 2025, which exceeded the reductions in core loss ratios. Despite this downward revision for 2025, the firm raised its EPS forecast for 2026 to $24.60, up from $24.35. The analysts expect that lower core and catastrophe loss ratios will be partially offset by a slight increase in expenses.
In their commentary, Keefe, Bruyette & Woods highlighted the company's strong underwriting capabilities and anticipated growth in investment income. However, they also noted that the potential for margin improvement in personal lines is largely realized and that the benefit of near-term reserve releases is expected to diminish.
The firm's evaluation suggests that the current valuation of Travelers stock strikes a balance between the company's underwriting strengths and the growth of investment income against the backdrop of completed improvements and future expectations. Trading at a P/E ratio of 11.25x and demonstrating strong revenue growth of 12.2% over the last twelve months, InvestingPro analysis indicates the stock is currently trading below its Fair Value, presenting a potential opportunity for investors seeking exposure to the insurance sector.
In other recent news, Travelers Companies Inc. reported robust Q4 results, outperforming consensus estimates with core earnings of $9.15 per share and revenue of $12.01 billion. The insurer also saw a 7% year-over-year growth in net written premiums, totaling $10.74 billion. Travelers' combined ratio improved to 83.2%, indicating higher underlying underwriting gains across all segments. For the full year of 2024, the company achieved a core income of $5.03 billion, marking a 64% increase from 2023, and grew its adjusted book value per share by 13% to $139.04.
Analysts are adjusting their forecasts for Travelers in light of these recent developments. Keefe, Bruyette & Woods raised its price target to $275, maintaining a Market Perform rating. Piper Sandler upgraded the company's stock from Neutral to Overweight, raising the price target from $259.00 to $310.00. BMO Capital Markets increased the price target to $297, maintaining an Outperform rating, while RBC Capital Markets cut its price target to $268, maintaining a Sector Perform rating. These adjustments reflect a combination of factors, including the company's Q4 performance, anticipated losses from California wildfires, and improving profit margins.
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