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On Friday, Wolfe Research downgraded Skyward Specialty Insurance Group (NASDAQ:SKWD) stock rating from Outperform to Peer Perform. The action follows the firm’s assessment of the company’s trading multiples and risk-return profile for the $2.1 billion market cap insurer. According to InvestingPro data, SKWD has shown strong momentum with a 42.34% return over the past year, though current analysis suggests the stock may be trading above its Fair Value. Wolfe Research noted that Skyward Specialty currently trades at a tangible book value (TBV) multiple of 3.1 times, which is above its one-year and post-IPO averages of 2.6 times and 2.5 times, respectively. Additionally, the stock is trading at 15.0 times its next twelve months (NTM) earnings per share (EPS), compared to its historical averages of 13.6 times and 12.9 times. InvestingPro analysis reveals the company maintains a strong financial health score of 3.64 (GREAT), with impressive revenue growth of 29.82% in the last twelve months.
The analyst from Wolfe Research provided insights into Skyward Specialty’s financial projections, citing an approximate 18% return on tangible common equity (ROTCE) in 2026 and a 7.8% cost of equity, which is consistent with the market’s current implied cost of equity for the company. Based on these factors, Wolfe Research suggested a justified price to TBV (P/TBV) of around 2.8 times and a price to earnings (P/E) multiple of 15.4 times.
Wolfe Research has removed its price target for stocks rated as Peer Perform and has set a year-end 2025 fair value range for Skyward Specialty Insurance Group at $50 to $59. This valuation is based on 13.0 to 15.5 times the firm’s estimated EPS for 2026, a downward revision from the prior price target of $51. This change reflects Wolfe Research’s latest analysis and expectations for Skyward Specialty’s financial performance in the coming years. For deeper insights into SKWD’s valuation and growth potential, investors can access the comprehensive Pro Research Report available on InvestingPro, which includes detailed analysis of the company’s financial health metrics and growth prospects.
In other recent news, Skyward Specialty Insurance Group reported fourth-quarter 2024 earnings that exceeded analysts’ expectations, with earnings per share (EPS) reaching $0.8 compared to the forecasted $0.65. The company’s revenue also surpassed projections, totaling $304.4 million against a forecast of $265.04 million. Jefferies analyst Andrew Andersen subsequently raised the firm’s price target for Skyward Specialty Insurance to $62, maintaining a Buy rating, and noted that the company’s quarterly performance aligned with its pre-announcement. The company’s management reaffirmed its guidance for 2025, highlighting expectations of completing underwriting actions in California by the end of the first quarter of 2025. Gross written premiums grew by 21% for the quarter, contributing to a full-year growth of 19%. Skyward provided a net income guidance for 2025 in the range of $138-150 million, with expectations for gross written premium growth in the low to mid-teens. The company continues to explore potential mergers and acquisitions while maintaining high standards for such opportunities.
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