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On Thursday, RBC Capital Markets adjusted its outlook on Travelers Companies Inc. (NYSE:TRV) shares, reducing the price target to $268 from $273, while maintaining a Sector Perform rating. The $54.8 billion insurance giant, which boasts a perfect Piotroski Score of 9 according to InvestingPro, demonstrated strong improvement in the underlying combined ratio, particularly within the Personal Insurance unit. The company's robust financial health is reflected in its "GREAT" overall score of 3.19/4 on InvestingPro's comprehensive assessment framework.
The RBC Capital analyst highlighted that past rate actions and strategic repositioning have contributed to the effectiveness of the Personal Insurance margins. The Business Insurance results were also noted as solid, contributing to attractive core margins. The quarter was marked by lighter catastrophic losses compared to recent quarters, which provided a positive impact on the company's financials. With revenue growth of 13.15% over the last twelve months and a track record of maintaining dividend payments for 23 consecutive years, Travelers continues to demonstrate operational strength. Additionally, reserve releases were tracking better than RBC Capital's initial forecasts.
Stability in overall insurance rate trends across Travelers' book of business during the quarter was observed. Despite these positive factors, RBC Capital revised its 2025 earnings per share (EPS) estimate for Travelers to $21.01 from $22.00, primarily due to the anticipated impact of California wildfire losses.
Looking further ahead, the firm raised its 2026 EPS forecast for Travelers to $24.00 from $22.75. This adjustment was made to reflect improved assumptions for net investment income (NII) and core margins. Trading at an attractive P/E ratio of 11x, InvestingPro analysis suggests the stock is currently undervalued relative to its Fair Value. The new price target of $268 is based on 1.9 times RBC Capital's revised ending fiscal year 2025 book value per share estimate for Travelers, while analyst targets range from $214 to $310 per share.
In other recent news, Travelers Companies Inc. reported impressive Q4 results, surpassing consensus estimates with core earnings of $9.15 per share and revenue of $12.01 billion. The company's combined ratio improved to 83.2%, indicating higher underlying underwriting gains across all segments. Furthermore, the insurer registered a 7% year-over-year growth in net written premiums, totaling $10.74 billion. Travelers also reported a record core income for the quarter at $2.1 billion, driven by robust growth in earned premiums and profitability. For the full year of 2024, the company achieved a core income of $5.03 billion, marking a 64% increase from 2023, and grew its adjusted book value per share by 13% to $139.04. In terms of analyst actions, Evercore ISI raised Travelers' stock price target to $288, expressing confidence in the company's strategic moves and recent performance. However, BofA revised Travelers' stock price target to $235, maintaining an underperform rating, while JPMorgan increased its price target to $260, keeping an underweight rating. These are the recent developments concerning Travelers Companies Inc.
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