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On Tuesday, RBC Capital Markets adjusted its outlook on Fairfax Financial Holdings (FFH:CN) (OTC: OTC:FRFHF), increasing the company’s price target from Cdn$1,600.00 to Cdn$1,750.00. The firm maintained an Outperform rating on the stock. The decision comes after Fairfax Financial closed out the year strongly, despite facing a quarter filled with catastrophic events.
Scott Heleniak of RBC Capital noted that Fairfax Financial has consistently produced solid overall combined ratios, highlighting a sub-90 combined ratio for Q4, which included the impact of hurricanes. The company’s underwriting results have been healthy for several quarters, and the Q4 reserve release rate was higher than that of its peers, a trend visible across all business segments.
Fairfax Financial reported double-digit premium growth, although the company has adopted a more selective approach to targeting growth due to current market conditions. Additionally, the company has continued to repurchase shares at a significant rate. Heleniak pointed out that the first-quarter guidance on California wildfire losses is noteworthy, particularly given the company’s reinsurance exposure to the event.
RBC Capital’s positive stance on Fairfax Financial is reinforced by the company’s robust execution, even in the face of challenging market dynamics. The firm’s analysts believe the stock is currently valued attractively, supporting their constructive view on the shares moving forward.
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