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On Thursday, Keefe, Bruyette & Woods analyst Meyer Shields adjusted the price target for AXIS Capital (NYSE:AXS) to $118 from the previous $115 while maintaining an Outperform rating on the stock. Shields’ reassessment came after a thorough review of the company’s year-end 2024 GAAP reserve triangles. The analysis led to the conclusion that AXIS Capital’s net reserves at the end of 2024 were overstated by $542 million, a decrease from the $690 million overstatement at the end of 2023. Trading at an attractive P/E ratio of 7.39x and maintaining strong profitability with a last twelve months EPS of $12.35, AXIS Capital demonstrates solid fundamental performance.
Shields noted that AXIS Capital’s reserve development for the calendar year 2024 showed $23 million in net reinsurance reserve releases across all reported lines of business, primarily from Accident Years 2021-2022. This was partially balanced by $15 million in net insurance reserve strengthening, predominantly in the Professional Lines and Marine & Aviation sectors.
The analyst’s confidence in the adequacy of AXIS Capital’s overall reserves has been bolstered by these findings. As a result, Shields has increased the earnings per share (EPS) estimates for 2025 and 2026 to $11.45 and $12.45 respectively, up from the earlier projections of $11.20 and $12.10. This upward revision primarily reflects the company’s significant quarter-to-date share repurchases.
Furthermore, the analyst anticipates that AXIS Capital will see reserve releases of $46 million in 2025 and $48 million in 2026, which represents an increase from the $24 million actual reserve releases in 2024. These projections form the basis for the raised price target and the maintained Outperform rating on AXIS Capital shares. InvestingPro analysis reveals the company’s overall financial health score is "GREAT" at 3.06, supported by strong profitability and cash flow metrics. For deeper insights into AXIS Capital’s financial health and valuation metrics, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Axis Capital Holdings Limited reported strong financial results for the fourth quarter of 2024. The company’s earnings per share (EPS) reached $2.97, exceeding analyst forecasts of $2.57, although revenue fell short at $1.47 billion compared to the expected $1.52 billion. Axis Capital also announced a new $400 million share repurchase program, replacing a previous $300 million program, and declared a quarterly dividend of $0.44 per common share. Additionally, the company executed a significant stock repurchase agreement, buying back $200 million worth of shares from T-VIII PubOpps LP, a Stone Point Capital-managed entity, under its existing share repurchase program. The company also highlighted a 98% increase in operating earnings per share for the full year 2024, demonstrating robust financial performance. Furthermore, Axis Capital’s combined ratio improved to 92.3%, reflecting better underwriting results. Analyst firms noted the company’s strong return on equity (ROE) of 18.6% for the year, reinforcing investor confidence in its financial health.
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