Selective Insurance Group stock price target lowered by BMO Capital

Investing.com - BMO Capital lowered its price target on Selective Insurance Group (NASDAQ:SIGI) to $88.00 from $96.00 on Tuesday, while maintaining an Outperform rating on the stock. The company, currently trading at a P/E ratio of 12.7 with revenue growth of 12.3% in the last twelve months, has maintained strong fundamentals despite market pressures.

The price target reduction follows over $200 million in reserve additions at the insurance company, raising investor concerns about the company’s financial position.

BMO Capital noted that investors appear to lack confidence that Selective Insurance will stop exhibiting reserve additions on business written in the past.

The research firm had previously viewed Selective Insurance’s reserves at the end of 2023 as "materially less conservative than its historical track record," according to its analysis.

Despite the price target reduction, BMO Capital maintained its Outperform rating, suggesting it still sees potential upside for the insurance company’s stock. InvestingPro analysis indicates the stock is currently undervalued, with additional insights revealing the company has maintained dividend payments for 51 consecutive years. Get access to 7 more exclusive ProTips and comprehensive analysis with an InvestingPro subscription.

In other recent news, Selective Insurance Group reported second-quarter earnings that did not meet analyst expectations. The company posted a non-GAAP operating income of $1.31 per diluted share, falling short of the anticipated $1.50 per share. Revenue for the quarter was $1.28 billion, below the consensus forecast of $1.33 billion. Despite these shortfalls, the results marked a notable improvement from the previous year’s second quarter, where the company experienced a loss of $1.10 per share. Additionally, Morgan Stanley (NYSE:MS) downgraded Selective Insurance’s stock rating from Equalweight to Underweight, citing challenges in the insurance cycle and a tough underwriting environment. The investment firm also lowered its price target for the company from $86.00 to $72.00. In governance news, board member Wole Coaxum resigned from Selective Insurance to focus on his company, Mobility Capital Finance Inc. His departure reduces the board size to 11 directors, with 10 remaining independent. These developments highlight the recent shifts and challenges facing Selective Insurance.

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