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On Tuesday, CFRA analyst Alex Goh elevated the stock rating of Swiss Re (SIX:SRENH) (SREN:SW) (OTC: OTC:SSREY) from Hold to Buy and increased the price target to CHF165.00, up from the previous CHF120.00. The stock, currently trading near its 52-week high of $39.42, has delivered an impressive 41% return over the past year. According to InvestingPro analysis, Swiss Re appears slightly undervalued at current levels. The adjustment reflects a positive outlook on the company’s earnings, with expectations of an improved performance across its core divisions.
Goh’s revised price target is based on a projected price-to-book value (P/BV) ratio of 2.2 times for the year 2025, which is one standard deviation above Swiss Re’s three-year average P/BV ratio of 1.9 times. The company currently trades at a P/B ratio of 2.0, with InvestingPro data showing an overall financial health score of "GREAT." This new target aligns with an anticipated uplift in the company’s earnings prospects. Despite maintaining the 2024 earnings per share (EPS) forecast at $10.85, the 2025 EPS estimate has been raised to $14.80, up from the previous $13.30. The analyst’s revision is attributed to lower expected reserve provisions and operating cost run-rate assumptions.
CFRA’s analysis is consistent with Swiss Re’s own financial targets, which include a 2025 net income goal of over $4.4 billion. This income is expected to be driven largely by stronger underwriting results, growth in investments, and cost savings. CFRA’s projections suggest a 2025 return on equity (ROE) of 18.8% for Swiss Re, significantly surpassing the insurer’s multi-year ROE target of over 14%.
The anticipated robust pricing in property and casualty (P&C) reinsurance, increased mortality premiums for life and health (L&H) insurance, and peak commercial rates for the corporate solutions division are all factors contributing to the positive assessment. Additionally, the dividend per share (DPS) is expected to grow annually at or above 7%, compared to the 5% growth rate from 2015 to 2024.
Goh’s upgrade to a Buy rating is underpinned by the stronger earnings growth trajectory he foresees for Swiss Re’s three core divisions, which include P&C reinsurance, L&H reinsurance, and corporate solutions.
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