On Tuesday, Truist Securities revised its price target for Kinsale Capital (NYSE:KNSL) shares, reducing it to $480 from the previous $580. Despite the cut in the price target, the firm maintained a Buy rating on the stock.
According to InvestingPro data, the stock appears undervalued at its current market cap of $9.8 billion, with a favorable PEG ratio of 0.47 indicating attractive valuation relative to growth. The adjustment was based on new data from New York, which showed a slight improvement in growth compared to the third quarter.
Mark Hughes of Truist Securities noted that the premium in four key states, including California, Florida, Texas, and New York, which collectively make up half of the Excess & Surplus (E&S) market, increased by 14% in the fourth quarter. This figure was slightly below the 15-16% gains seen in the previous two quarters. However, excluding an unusual $506 million premium in California for 'couriers & messengers,' the growth would have been around 10%.
The decision to lower the price target to $480 was based on the assumption that Kinsale Capital will retain its current forward Price to Earnings (P/E) multiple of 22x and that its earnings will grow in the mid-teens. Truist Securities also adjusted its growth estimate for Kinsale Capital's fourth-quarter gross written premiums to 12% from the initially projected 18%. This change aligns with the state data, which has been a reliable indicator of the company's top-line performance.
Looking ahead, Truist Securities' model assumes that Kinsale Capital will sustain the revised level of written premium growth through the end of 2025. InvestingPro subscribers can access 12 additional key insights and detailed valuation metrics for KNSL, including comprehensive growth forecasts and financial health scores. The forecasted combined ratio is expected to be just below 79%, consistent with the firm's projected results for 2024.
In other recent news, Kinsale Capital Group (NYSE:KNSL), a specialty insurance provider, has been the subject of several analyst assessments due to its strong performance and resilience in the market. JPMorgan (NYSE:JPM) analysts noted that Kinsale Capital has minimal exposure to California homeowners' insurance, which could potentially benefit from increased pricing discipline among mutual carriers.
The company's robust financial performance was evident in its Q3 2024 results, with a 27% increase in operating earnings per share and a 19% rise in gross written premiums compared to Q3 2023.
Analysts from Morgan Stanley (NYSE:MS) initiated coverage of Kinsale Capital with an Overweight rating, citing the company's potential for continued expansion and profitability. BMO Capital Markets, Truist Securities, RBC Capital, and Wolfe Research have also updated their outlooks on Kinsale Capital, reflecting a variety of perspectives on the company's financial health and future potential.
Kinsale Capital's board also approved a $100 million share buyback program, indicating confidence in the company's future performance. The 2024 earnings per share estimate for Kinsale Capital remains unchanged at $15.70, while the 2025 EPS forecast has been increased to $18.50 from $18.30. This shift reflects a slightly slower top-line growth of 16%, partially offset by investment income.
These recent developments highlight Kinsale Capital's strong position in the market and its potential for sustained growth and profitability. Despite facing challenges such as increased competition and the impact of recent natural disasters, Kinsale Capital anticipates continued growth in new business submissions with a long-term growth opportunity of 10% to 20%.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.