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RBC Capital Markets initiated coverage on Fairfax Financial Holdings (TSX:FFH) (OTC:FRFHF) with an outperform rating and a price target of $2,050.00 on Wednesday.
The investment firm cited positive momentum in Fairfax’s underwriting operations and investment portfolio as key factors behind its favorable outlook, noting that the current valuation does not fully reflect these strengths.
RBC Capital expects Fairfax’s underwriting results to remain strong in what it describes as a favorable pricing environment, despite some slowing. The firm highlighted Fairfax’s track record of opportunistic growth, specifically mentioning its InsureTech company Ki, which is also backed by Blackstone (NYSE:BX).
The research note pointed to Fairfax’s investment portfolio, which has been repositioned to capitalize on the current interest rate environment, as a driver of improving investment results that RBC expects to continue.
RBC Capital predicts the price-to-book valuation discount compared to peers will narrow as Fairfax continues to deliver consistent operating results.
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