Tuesday, AXIS Capital Holdings Limited (NYSE:AXS) received an optimistic update from Keefe, Bruyette & Woods, with the firm raising its price target on the stock to $88 from $86 while maintaining an Outperform rating. The adjustment follows the company's second-quarter earnings report and subsequent conference call.
The analyst at Keefe, Bruyette & Woods has revised the earnings per share (EPS) estimates for AXIS Capital, increasing the 2024 forecast to $10.85 and the 2025 projection to $11.00, up from the previous estimates of $10.15 and $10.55, respectively. Additionally, the firm has introduced a 2026 EPS estimate of $11.40.
These revisions are based on the company's second-quarter performance, which exceeded expectations, and assumptions of accelerated investment income growth coupled with reduced catastrophe losses and expenses for 2024. The projected increase in the 2025 expense ratio partially offsets these positive factors.
The firm's analyst believes that AXIS Capital's valuation discount compared to its specialty-focused peers will decrease as the company continues to deliver strong and stable underwriting and investment income, particularly in the second half of 2024 and beyond. This outlook is grounded in the company's recent financial performance and strategic positioning.
AXIS Capital's revised price target of $88 is anchored in a valuation methodology that applies an 8.0 times multiple to the updated 2025 earnings estimate and equates to 138% of the firm's projected year-end 2024 book value per share (BVPS). The increase in the price target reflects the analyst's confidence in the company's future financial health and market performance.
In other recent news, AXIS Capital Holdings Limited reported robust results for the second quarter of 2024. The company saw significant growth in specialty underwriting and a record $2.4 billion in revenue. Operating earnings per share rose to $2.93, marking a 31.5% increase from the same quarter in the previous year, and an operating return on equity (ROE) of 20%. The combined ratio stood at a solid 90.4%, reflecting the company's underwriting profitability.
Additionally, AXIS Capital's investment income hit a record $191 million, a 40% increase from the previous year. The company returned $76 million to shareholders through dividends and share repurchases. Despite a 5% decrease in U.S. casualty due to reshaping of the primary casualty business, AXIS Capital experienced strong performance in the insurance segment, particularly in property lines.
InvestingPro Insights
Following the upbeat assessment by Keefe, Bruyette & Woods, AXIS Capital Holdings Limited (NYSE:AXS) also shows promising signs according to recent InvestingPro data. With a market capitalization of $6.07 billion and an attractive P/E ratio of 9.87, the company stands out for its financial stability. In the last twelve months as of Q2 2024, AXIS Capital has exhibited a solid revenue growth of 7.16%, underlining its capacity to expand effectively in the competitive insurance industry. Moreover, the adjusted P/E ratio for the same period is even more appealing at 8.97, suggesting a favorable valuation relative to earnings.
InvestingPro Tips further complement the positive outlook, highlighting that management's aggressive share buyback strategy and the company's consistent dividend growth, with dividends raised for 21 consecutive years, signal a shareholder-friendly approach. Additionally, the anticipation of net income growth this year and the fact that four analysts have revised their earnings upwards for the upcoming period, reflect confidence in AXIS Capital's financial trajectory. Notably, the company is trading at a low P/E ratio relative to near-term earnings growth, which could indicate an investment opportunity for value-oriented investors. For those interested in deeper analysis, over ten additional InvestingPro Tips are available, offering insights into AXIS Capital's financial health and market position.
These metrics and insights from InvestingPro suggest that AXIS Capital is well-positioned to continue its growth trajectory and may offer potential for investors looking for stability and steady returns in the insurance sector.
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