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On Monday, Raymond (NSE:RYMD) James analyst Gregory Peters updated the firm’s outlook on Hartford Financial Services (NYSE:HIG), raising the price target to $135 from the previous $125, while maintaining an Outperform rating on the company’s shares. This adjustment reflects a positive stance on Hartford’s potential to produce higher Return on Equity (ROE) compared to its peers through 2026, as well as an attractive stock valuation with an estimated 2025 P/E ratio of 11.5x, which is below the peer average of 13.5x. The company, currently valued at $34.88 billion, trades at a P/E ratio of 11.64x and has demonstrated strong financial health, earning a "GREAT" rating according to InvestingPro metrics.
The revised price target and maintained Outperform rating come after Peters’ review of Hartford’s recent management commentary and industry trends. The analysis included updates to several model assumptions, particularly regarding the company’s underlying Combined Ratio (CR) and Prior Year Development (PYD) across different segments. Adjustments were also made to the Group Benefits core income margin to account for seasonal trends. InvestingPro data reveals that Hartford has raised its dividend for 12 consecutive years, demonstrating consistent shareholder returns. The stock is currently trading near its 52-week high of $124.90.
Furthermore, Peters introduced a cautious approach to the Hartford Funds core earnings projections, acknowledging the impact of market volatility on the investment subsidiary of Hartford. This caution is reflected in the revised operating Earnings Per Share (EPS) estimates for 2025 and 2026, which have been lowered to $10.65 and $12.30, respectively, from the previous estimates of $10.85 and $12.50.
Despite the reduction in EPS estimates, the analyst’s outlook for Hartford remains positive, with expectations for mid to high single-digit Net Written Premium (NWP) growth, stable underlying combined ratios, and core Return on Beginning Equity (ROBE) exceeding 18% through 2026. Peters’ analysis underscores the company’s strong fundamentals and the potential for sustained financial performance in the coming years.
In other recent news, Hartford Financial Services Group reported its fourth-quarter 2024 earnings, with an earnings per share (EPS) of $2.94, exceeding analyst expectations of $2.67. However, the company reported a slight revenue shortfall, bringing in $6.89 billion compared to the forecasted $6.91 billion. The company’s Commercial Lines segment contributed significantly, with core earnings of $665 million, supported by strategic investments in technology and data science. Jefferies recently revised its price target for Hartford Financial, lowering it to $118 from $121, while maintaining a Hold rating. This adjustment followed the company’s fourth-quarter results, which highlighted adverse reserve developments for several accident years. Hartford Financial’s management remains confident in their reserve adequacy and strategic actions, despite challenges such as moderating Group Benefits margins and potential impacts from catastrophic events like the California wildfires. The company’s strategic focus is on maintaining strong underwriting practices and leveraging commercial growth initiatives.
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