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On Wednesday, Keefe, Bruyette & Woods updated their outlook on Travelers Companies Inc (NYSE:TRV) shares, raising the price target to $303 from the previous $290, while keeping an Outperform rating on the stock. The revision follows Travelers’ recent announcement regarding the sale of a significant portion of its Canadian operations.
Travelers disclosed on Tuesday that it would be divesting most of its Canadian businesses, with the exception of surety, to Definity Financial (TSX:DFY) for $2.4 billion. This transaction represents approximately 1.8 times the book value, after adjusting for about $800 million of ’local’ capital being sold at book value for tax purposes. The deal is expected to close in the first quarter of 2026. For investors seeking deeper insights, InvestingPro offers extensive analysis and 10+ additional ProTips about Travelers’ valuation and market position.
The company has outlined plans to allocate $700 million from this sale towards additional stock buybacks in 2026. Travelers also anticipates a modest increase in earnings per share (EPS) over the next few years as a result of the transaction. Despite the pending sale, Keefe, Bruyette & Woods has maintained their EPS estimates for 2025 and 2026 at $19.45 and $25.25 respectively.
The raised price target to $303 is based on a 12.0x multiple of the firm’s estimated 2026 EPS, reflecting an anticipated higher return on equity post-deal. The valuation also indicates confidence in the company’s financial strategy and future performance. Details on the financial results of the units to be sold and how Travelers will report these units’ results before the closure are still awaited.
In other recent news, Travelers Companies Inc. reported strong earnings for the first quarter of 2025, significantly exceeding analyst expectations. The company posted an earnings per share (EPS) of $1.91, well above the forecasted $0.81, and revenue reached $11.81 billion, surpassing the anticipated $10.94 billion. In a strategic move, Travelers announced an agreement to divest its Canadian personal and commercial insurance units to Definity Financial Corporation for $2.4 billion. This transaction is expected to close in the first quarter of 2026, subject to regulatory approval, and is anticipated to slightly boost Travelers’ earnings per share through subsequent share buybacks.
Analyst firm Keefe, Bruyette & Woods recently increased its price target for Travelers from $274 to $290, maintaining an Outperform rating due to the company’s strong earnings report and revised EPS estimates for 2025 and 2026. Similarly, Goldman Sachs raised its price target for Travelers to $294, citing a strong start to the insurance earnings season and improved underwriting results. Travelers plans to use approximately $0.7 billion from the transaction proceeds for share repurchases, with the remainder supporting ongoing operations.
The company’s strategic investments in technology and innovation, along with a diversified insurance portfolio, have contributed to its robust performance. Travelers’ management has acknowledged the impact of tariffs as manageable, with expectations of a minimal effect on liability costs. Overall, the company’s recent developments reflect a solid financial standing and strategic positioning in the market.
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