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Investing.com - Piper Sandler lowered its price target on Palomar Holdings (NASDAQ:PLMR) to $151.00 from $177.00 on Wednesday, while maintaining an Overweight rating on the specialty insurer. According to InvestingPro data, the stock appears undervalued at current levels, with strong fundamentals supported by a 53% revenue growth in the last twelve months.
The adjustment follows Palomar’s recent earnings report, which showed earnings per share of $1.76, exceeding both the consensus estimate of $1.68 and Piper Sandler’s projection of $1.69. Despite the earnings beat, underwriting results fell short of expectations, primarily due to a higher-than-anticipated expense ratio. The stock has declined 14% over the past week, pushing it into oversold territory according to RSI indicators, as revealed by InvestingPro analysis.
Piper Sandler noted that a mix change with early reporting of crop insurance raised the combined ratio, though this was characterized as a quarterly timing issue rather than a long-term concern. Total (EPA:TTEF) revenue outperformed expectations, contributing to the overall earnings beat.
The company raised its guidance for the second consecutive quarter and announced a new share repurchase program, signaling confidence in its financial outlook despite the expense ratio challenges. This confidence appears well-founded, as InvestingPro data shows the company maintains a "GREAT" overall financial health score, with a robust return on equity of 22%.
Piper Sandler suggested the post-earnings sell-off presents an opportunity for investors, noting that at approximately 13 times forward earnings, Palomar now trades similarly to insurers with mid-teens ROE and single-digit growth rates, while Palomar is expected to deliver ROEs around 20% and growth rates exceeding 20% for the foreseeable future. For deeper insights into Palomar’s valuation and growth prospects, including 8 additional ProTips and comprehensive financial analysis, visit InvestingPro.
In other recent news, Palomar Holdings Inc . delivered impressive financial results for the second quarter of 2025, surpassing analyst expectations. The company reported an earnings per share (EPS) of $1.76, which exceeded the anticipated $1.67. Additionally, Palomar Holdings achieved revenues of $496.3 million, outpacing projections by 8.1%. Despite these strong financial results, the company experienced a decline in share value in after-hours trading, influenced by broader market conditions and specific company challenges. These developments highlight the complexities faced by Palomar Holdings in navigating market dynamics. Investors may take note of the company’s ability to exceed forecasts, even as external factors impact stock performance. The recent earnings report underscores the importance of monitoring both company achievements and market influences.
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