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On Friday, Keefe, Bruyette & Woods (KBW) updated their financial outlook on Palomar Holdings (NASDAQ:PLMR), increasing the price target to $195 from the previous $145 while retaining an Outperform rating on the company’s shares. The adjustment follows Palomar’s first-quarter earnings report for 2025, which surpassed expectations.
Meyer Shields, an analyst at KBW, highlighted the company’s strong performance in the first quarter of 2025, leading to an elevation of the discounted cash flow (DCF)-based target price. Shields noted the revision of the earnings per share (EPS) estimates for 2025 and 2026 to $6.75 and $8.25, respectively, up from the former forecasts of $6.50 and $8.00. The improved outlook takes into account the first quarter’s outperformance and anticipates accelerated growth in premiums and net investment income (NII), lower catastrophe losses, and larger reserve releases, which may be somewhat balanced by increased expense ratios. InvestingPro data shows impressive revenue growth of 50.51% over the last twelve months, with the company maintaining a GREAT financial health score.
The firm anticipates Palomar will continue to demonstrate robust growth in both gross and net written and earned premiums. KBW also expects consistently solid underwriting results, which are predicted to contribute to the company’s outperformance over the next 12 months. This optimism is reflected in the company’s market performance, with InvestingPro showing a remarkable 90.33% return over the past year and the stock trading near its 52-week high of $163.78.
Palomar’s first-quarter achievements have set a positive tone for the company’s financial trajectory, and KBW’s updated target price reflects a confidence in the insurer’s ability to maintain a strong performance. The Outperform rating suggests that KBW believes Palomar’s stock will perform better than the overall market or its industry sector in the coming year.
Investors and market watchers will be keeping a close eye on Palomar’s progress as the company moves forward with its growth strategies, bolstered by a favorable assessment from a prominent financial institution.
In other recent news, Palomar Holdings reported a notable earnings performance for Q1 2025, with adjusted earnings per share (EPS) reaching $1.87, surpassing the projected $1.62. The company experienced a 20% increase in gross written premiums, amounting to $442.2 million, although revenue slightly missed expectations at $442.16 million against a forecast of $449.87 million. Palomar Holdings also raised its full-year 2025 adjusted net income guidance to a range of $186 million to $200 million. Truist Securities has increased its price target for Palomar Holdings to $188, maintaining a Buy rating, citing a positive outlook on the company’s earnings potential. Analyst Mark Hughes from Truist highlighted the potential for Palomar to benefit from lower reinsurance costs, which could positively impact earnings. The firm’s revised price target reflects confidence in Palomar’s robust top-line growth and solid returns within the specialty property and casualty insurance sector. These developments underscore Palomar’s strategic initiatives and efforts to strengthen its position in the market.
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