On Monday, Truist Securities updated its outlook on ProAssurance Corporation (NYSE:PRA), a leading provider of professional liability insurance. The firm increased its price target on the stock to $18.00, up from the previous $14.00, while keeping a Hold rating on the shares.
The adjustment follows ProAssurance's third-quarter performance, which prompted Truist Securities to revise its 2024 earnings per share (EPS) forecast to $0.84, up from $0.65. However, the 2025 EPS forecast remains unchanged at $0.85. The analyst highlighted reserve gains as a significant factor for future EPS, with an expectation of a modest 210 basis points increase next year.
Management's comments during the third-quarter earnings call were also noted, indicating an anticipation of continued progress in earnings. Despite this positive outlook, the analyst pointed out that concerns about social inflation and top-line trends could still limit the stock's performance.
The new price target of $18.00 is equivalent to 0.7 times the company's book value, which has been adjusted in light of early signs of improving fundamentals. The valuation is seen as attractive, standing at 0.6 times the book value excluding accumulated other comprehensive income (AOCI), yet the analyst suggests that the prevailing uncertainties may keep the stock's upside in check.
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