Palomar stock holds $152 target, Outperform rating at KBW

On Wednesday, Keefe, Bruyette & Woods (KBW) maintained a positive outlook on Palomar Holdings (NASDAQ:PLMR), reiterating an Outperform rating and a price target of $152.00. The firm’s analysts conducted a review of Palomar’s year-end 2024 Generally Accepted Accounting Principles (GAAP) loss triangles, which revealed a modest reserve redundancy, primarily in property-related claims, amounting to $7.6 million.

The KBW analysts believe that Palomar’s shares will benefit from continued rapid and profitable premium growth, supported by what they perceive to be a favorable property underwriting environment. This assessment underpins their decision to maintain the Outperform rating and the Discounted Cash Flow (DCF)-derived 12-month target price of $152 for the company’s stock. The optimism appears well-founded, as InvestingPro data shows impressive revenue growth of 47.33% in the last twelve months, with the stock delivering a remarkable 55.54% return over the past year.

The firm’s analysts have also kept their earnings per share (EPS) estimates for Palomar unchanged, projecting $6.45 for the year 2025 and $7.90 for 2026. These projections are based on the assumption that there will be no net reserve development, which refers to changes in the estimated costs of claims from one period to the next.

Palomar’s positive reserve development, as indicated by the review, suggests that the company has set aside more funds than necessary to cover its claims, which can be seen as a sign of conservative financial management and a potential source of future earnings if the reserves are released.

The analysts’ maintained rating and price target reflect their confidence in Palomar’s ability to continue its growth trajectory over the next year, as they expect the company’s strategic positioning and market conditions to drive its share value upwards.

In other recent news, Palomar Holdings reported its fourth-quarter 2024 earnings, exceeding analyst expectations with an earnings per share (EPS) of $1.52, compared to the forecasted $1.22. Despite this, the company’s revenue was slightly below expectations at $373.7 million against a forecast of $377.97 million. The company’s adjusted net income for 2024 grew by 43% year-over-year, reaching $133.5 million, highlighting robust growth. Following the earnings announcement, Keefe, Bruyette & Woods (KBW) raised the price target for Palomar Holdings shares from $136.00 to $152.00, maintaining an Outperform rating. KBW’s decision was influenced by Palomar’s demonstrated solid growth and positive underwriting results, with revised EPS estimates for 2025 and 2026. The firm also expressed confidence in Palomar’s continued performance in premium growth and underwriting. These developments reflect a positive outlook for Palomar’s future performance, as noted by KBW analysts.

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