On Friday, Jefferies analyst Simon Fitzgerald changed the rating for QBE Insurance Group Ltd. (QBE:AU) (OTC: QBEIF), lifting it from Hold to Buy, and increased the price target to AUD24.30, up from the previous AUD21.00. Fitzgerald’s upgrade is based on a conservative outlook that he believes favors consistency and stability over market expansion, indicating that the company’s efforts to stabilize its operations are bearing fruit.
Fitzgerald highlighted QBE’s financial performance, noting that the forecasted fully year 2024 earnings per share (EPS) adjusted for dilution is 114.2 cents, marking a 26% increase compared to the prior corresponding period (pcp). Additionally, the net profit after tax (NPAT) adjusted is expected to reach $1,729 million, up by 27% versus pcp. The combined operating ratio (COR), a key measure of profitability in the insurance industry, is projected at 93.1%, slightly better than the guidance of 93.5%.
Looking ahead to fiscal year 2025, QBE is expected to achieve mid-single-digit growth in gross written premium (GWP), a COR of 92.5%, and a catastrophe (CAT) allowance of $1,160 million. In light of these projections, Fitzgerald revised his EPS estimates upwards by 2% to 5% across the forecast period.
The upgrade to Buy reflects Fitzgerald’s confidence in QBE’s strategic approach and the anticipated positive outcomes of the company’s focus on business stabilization. The new price target of AUD24.30 represents an increase from the prior target and suggests potential upside for the stock based on the analyst’s revised expectations.
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