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Investing.com - Raymond (NSE:RYMD) James downgraded Kemper Corp (NYSE:KMPR) from Strong Buy to Outperform while reducing its price target to $60.00 from $82.00 following the insurer’s second-quarter earnings report. According to InvestingPro data, the stock appears significantly undervalued at current levels, with analyst targets ranging from $50 to $90.
The downgrade comes after Kemper shares fell 21% following its 2Q25 earnings release, with Raymond James citing increased competition in the Non-Standard Personal Auto market, particularly in Florida, that could keep the company’s return on equity below peers over the next 12 months. InvestingPro data shows the stock’s RSI indicates oversold conditions, while the company maintains a "GOOD" overall financial health score.
Kemper reported net premiums written increased approximately 7% year-over-year in 2Q25, a significant slowdown from the 24% growth in 1Q25 and over 28% growth in previous quarters. The specialty property and casualty combined ratio deteriorated to 95.4% in 2Q25, approximately 450 basis points worse year-over-year, which included $19 million of adverse development due to litigation impact on bodily injury claims. Despite these challenges, the company has maintained dividend payments for 36 consecutive years, as noted in InvestingPro’s analysis, with additional insights available in the Pro Research Report.
Raymond James noted that competitors have implemented rate decreases in many geographies, including Progressive, which decreased rates in Florida by 8% last December and another 6% in June. Kemper management reported seeing a modest decline in policy life expectancy in Florida and consistently competitive conditions in Texas.
The company has authorized a $500 million open-ended share repurchase program, which Raymond James estimates could result in over $200 million in stock repurchases by year-end 2025 and over $300 million in both 2026 and 2027, as the stock currently trades roughly in-line with its book value.
In other recent news, Kemper Corporation reported its second-quarter 2025 earnings, which did not meet analysts’ expectations. The company posted operating earnings per share of $1.30, falling short of the consensus estimate of $1.52. Revenue also slightly missed projections, coming in at $1.23 billion compared to the expected $1.24 billion. The shortfall in earnings was largely attributed to $18.7 million in unfavorable development in the commercial auto segment, influenced by social inflation. Following these results, Citizens JMP lowered its price target for Kemper to $75.00 from $85.00, while maintaining a Market Outperform rating. Piper Sandler, however, downgraded the stock from Overweight to Underweight, citing concerns over policies-in-force growth and underwriting profitability. Piper Sandler also significantly reduced its price target for Kemper to $50.00 from $75.00. These developments highlight the challenges Kemper is facing in its commercial auto segment and overall financial performance.
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