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Keefe, Bruyette & Woods reiterated its outperform rating and $45.00 price target on Bowhead Specialty Holdings (NYSE: BOW) following investor meetings with the company’s leadership team.
The investment firm maintained its earnings per share estimates of $1.65 for 2025 and $2.05 for 2026, while introducing a 2027 estimate of $2.40 per share. The price target represents 22.0 times the firm’s 2026 earnings estimate. The company currently trades at a P/E ratio of 29x, with analysts expecting continued profitability, as highlighted in InvestingPro’s comprehensive analysis.
KBW expressed confidence in Bowhead’s prospects for sustained mid-teens return on equity as the company leverages strong casualty pricing to drive profitable premium growth. The firm noted this growth is increasingly augmented by Baleen, Bowhead’s technology-based small-account excess and surplus platform. Recent performance supports this outlook, with BOW achieving a 14% return on equity and impressive revenue growth of 45% over the last twelve months.
The research note highlighted Bowhead’s conservative initial accident-year loss picks and potential upside from reserve releases. KBW’s analysis assumes a broadly favorable casualty operating environment continuing through its forecast period.
The investment firm expects solid revenue growth and noted Bowhead’s insulation from pre-2020 accident year reserve adequacy concerns as factors that could boost the company’s shares over the next 12 months.
In other recent news, Bowhead Specialty Holdings Inc. reported a robust financial performance for the first quarter of 2025. The company achieved a 26% increase in gross written premiums, totaling $175 million, and recorded an adjusted net income of $11.5 million, or 34 cents per diluted share. This growth was primarily driven by the casualty division, with significant contributions from the healthcare and professional liability divisions. Despite these positive results, Bowhead’s stock experienced a premarket decline of 2.2%, indicating some investor caution. Looking ahead, Bowhead is optimistic about achieving a 20% annual premium growth, supported by its Baleen technology platform and plans to expand its distribution network. Analysts from firms like PSC and Citizens Bank have been examining the company’s strategic focus on disciplined underwriting and growth. Additionally, Bowhead’s net investment income saw a 64% year-over-year increase, amounting to $12.6 million, reflecting higher yields on invested assets. The company maintains a combined ratio of 97.3%, with an expense ratio of 30.4% and a loss ratio of 66.9%.
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