Fed’s Waller emerges as top candidate for Fed chair - report
On Wednesday, Morgan Stanley (NYSE:MS) analysts downgraded Everest Group stock, listed on the New York Stock Exchange (NYSE: EG), from Overweight to Equalweight, adjusting the price target to $340 from the prior $425. The downgrade follows the company’s announcement of $1.7 billion in reserve charges, prompting a shift in investor focus towards the remediation of the US casualty book. The stock, currently trading at $341.72 with a market capitalization of $14.7 billion, is near its 52-week low. According to InvestingPro, eight analysts have recently revised their earnings estimates downward for the upcoming period.
Morgan Stanley’s assessment suggests that Everest Group’s growth and underwriting profile may be subdued for several years as it seeks to improve its primary casualty segment. The analysts also anticipate a deceleration in the reinsurance segment due to soft market pricing conditions. These factors are expected to constrain the company’s capacity for short to medium-term growth. Despite these challenges, InvestingPro data shows the company maintains a GREAT overall financial health score, trading at a modest P/E ratio of 10.9.
The process of remedying the primary casualty book could take a year or two, according to the analysts, while a turnaround in reinsurance pricing might also require a year or more. In light of these projections, Morgan Stanley has revised its earnings per share (EPS) estimates for Everest Group, reducing the 2025 forecast by approximately 26% to $54.13 and the 2026 forecast by around 20% to $67.19.
The comprehensive review by Morgan Stanley reflects concerns about the time and effort required for Everest Group to address its current challenges. The analysts underscore the potential impact of these operational issues on the company’s future performance and stock valuation.
In other recent news, Everest Group experienced a challenging fourth quarter, posting a net loss of $593 million, a stark contrast to the net income of $804 million reported in the same period last year. The company’s revenue also fell short of expectations, coming in at $4.03 billion versus estimates of $4.42 billion. Notably, Everest Group took action to bolster prior year U.S. casualty reserves by $1.1 billion and increased current accident year losses in U.S. casualty lines by $206 million, totaling a significant $1.3 billion.
Everest Group’s gross written premiums slightly exceeded TD Cowen’s projections, while the net investment income fell short, attributed to weaker limited partnership returns. TD Cowen maintained its Hold rating on Everest Group shares, with a steady price target of $405.00. The firm’s analysis acknowledged the company’s fourth-quarter earnings per share missed expectations, aligning with predictions due to a significant casualty reserve charge disclosed earlier.
Despite these challenges, Everest Group’s Reinsurance segment performed well, with gross written premiums growing 12.6% year-over-year to $3.3 billion. The company also reported a net income of $1.37 billion on revenue of $17.28 billion for the full year. Everest Group anticipates pre-tax net catastrophe losses of $350-450 million in Q1 2025 from California wildfires.
These are recent developments in Everest Group’s financial performance and outlook. TD Cowen’s reiteration of the Hold rating suggests a cautious approach to the company’s stock, pending further commentary from management.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.