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On Tuesday, JMP Securities maintained a Market Perform rating on Palomar Holdings, Inc. (NASDAQ:PLMR), currently trading at $153.56 with a market capitalization of $4.1 billion, after the company reported first-quarter earnings that surpassed analysts’ forecasts. According to InvestingPro analysis, the company maintains a "GREAT" financial health score of 3.55 out of 5, reflecting its robust operational performance. The company’s Operating Earnings Per Share (EPS) for the first quarter of 2025 was $1.87, which exceeded JMP’s estimate of $1.49 and the consensus of $1.59. The outperformance was primarily due to a lower-than-expected combined ratio of 73% compared to the estimated 77%, and net earned premiums (NEP) totaling $164 million versus the anticipated $151 million.
The consolidated loss ratio for Palomar Holdings, which includes various components such as attritional/accident-year loss ratio, prior-period development ratio, and catastrophe loss ratio, turned out to be more favorable than projected. The attritional/accident-year loss ratio was slightly higher at 27% versus the estimated 25%, but this was offset by a more positive prior-period development ratio, which was 2.6 points favorable compared to no expected change. Additionally, the catastrophe loss ratio was -0.3%, better than the expected +1.5%. Overall, the consolidated loss ratio was reported at 24%, lower than the estimated 27%.
The company’s expense ratio met expectations at 50%. Palomar’s top-line growth was also noteworthy, with a 20% increase that outpaced JMP’s estimate of 18%. This growth was fueled by a 23% rise in earthquake product revenues and a 19% increase in non-earthquake products, with casualty lines making the strongest contribution. InvestingPro data shows impressive revenue growth of 47.33% over the last twelve months, with analysts forecasting 22% growth for fiscal year 2025.
Despite the strong performance in key metrics, Palomar’s book value at the end of the quarter was slightly below JMP’s estimate, finishing at $28.56 compared to the anticipated $29.26. However, this still marked a 4% increase from the book value reported on December 31. The company’s robust quarterly results reflect its ability to outperform in several areas, including its core product lines and overall profitability measures. Trading at a P/E ratio of 33.64, InvestingPro analysis suggests the stock is currently fairly valued. For deeper insights into Palomar’s valuation and growth prospects, including 14 additional ProTips and comprehensive financial analysis, investors can access the full Pro Research Report available on InvestingPro.
In other recent news, Palomar Holdings has caught the attention of several analyst firms with notable changes to their stock ratings and price targets. Evercore ISI raised its price target for Palomar to $163, maintaining an In Line rating, following a strong quarter highlighted by an underwriting beat. The firm’s analysts noted growth in earthquake coverage despite competitive pressures and revised estimates for fiscal years 2025 and 2026 upward by 3%. Truist Securities also increased its price target to $178, maintaining a Buy rating, citing significant growth in Palomar’s E&S premiums in key states and potential positive impacts from lower reinsurance costs.
Conversely, Keefe, Bruyette & Woods reduced their price target to $145, while still endorsing an Outperform rating, emphasizing Palomar’s strategic initiatives like new product launches and recruitment of underwriters. JPMorgan upgraded Palomar’s stock rating from Neutral to Overweight, raising the price target to $150, and expressed confidence in the company’s growth potential despite recent share price increases. Piper Sandler reaffirmed its Overweight rating with a $150 target, highlighting Palomar’s ambitious "Palomar 2X" objective to double the company’s size in terms of capital, premium, and net adjusted income by 2025. These developments reflect a strong focus on Palomar’s growth strategies and potential for continued success in the insurance market.
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