Keefe Bruyette maintains Outperform, steady stock target on Fidelis Insurance By Investing.com

On Friday, Keefe, Bruyette & Woods maintained their Outperform rating on shares of Fidelis Insurance Holdings (NYSE:FIHL), with a steady price target of $24.00. The firm updated its earnings per share (EPS) estimates for the upcoming years, following the company’s second quarter earnings report and conference call.

The firm raised its 2024 and 2025 EPS forecasts for Fidelis Insurance to $3.40 and $3.70, up from the previous estimates of $3.30 and $3.65, respectively. Moreover, Keefe, Bruyette & Woods initiated its 2026 EPS estimate at $4.25.

The revisions take into account the results from the second quarter of 2024, expectations for faster net investment income growth, lower core loss and expense ratios, and larger reserve releases. These positive factors are partially balanced by projections of slower premium growth and increased catastrophe losses.

Keefe, Bruyette & Woods expressed confidence in Fidelis Insurance’s valuation, suggesting that the current share price does not fully reflect the potential for solid book value growth. The firm anticipates strong gross written premium (GWP) growth in a favorable operating environment, coupled with rapid investment income, to drive this increase in book value.

The analyst’s commentary highlighted the company’s performance, noting that Fidelis Insurance is positioned for continued growth and profitability. Keefe, Bruyette & Woods’ target price of $24.00 is based on 96% of their year-end 2024 estimated book value per share (BVPS) and 6.5 times their updated 2025 estimated EPS.

The firm’s outlook remains positive on Fidelis Insurance, with expectations of the company’s share price to appreciate and align with the projected growth in book value and earnings.

In other recent news, Fidelis Insurance Holdings Limited has experienced significant developments. The company reported a robust 24.7% increase in gross premiums written in the second quarter and has initiated a $200 million share repurchase program. Despite the growth, Fidelis has discontinued underwriting intellectual property insurance due to inherent challenges.

The company’s Property Direct and Facultative segments demonstrated strong performance, while the Aviation and Aerospace sector experienced a decline in premiums. Analysts from various firms have noted these changes, with some expressing optimism about Fidelis’s growth prospects.

The company is on track to meet its 2024 premium targets and is confident in its ability to optimize its reinsurance portfolio and pursue growth through new origination channels. These are indeed recent developments worth noting for investors interested in Fidelis Insurance Holdings Limited.

InvestingPro Insights

Our real-time analysis from InvestingPro provides additional context to Keefe, Bruyette & Woods’ optimistic outlook on Fidelis Insurance Holdings (NYSE:FIHL). With a P/E ratio of 4.72, the company is trading at a low earnings multiple, which could indicate that the stock is undervalued relative to its earnings potential. This aligns with the firm’s assessment that the current share price does not fully reflect the company’s growth potential.

Despite analysts anticipating a sales decline in the current year, with revenue growth at -36.1% for the last twelve months as of Q2 2024, Fidelis Insurance has maintained profitability over the same period. The company also boasts a robust gross profit margin of 23.95% and an operating income margin of 21.46%, underscoring its efficiency in managing operations and costs.

InvestingPro Tips suggest that while net income is expected to drop this year, analysts predict the company will remain profitable. This is paired with a significant price uptick of 36.4% over the last six months, which may reflect investor confidence in the company’s ability to sustain its profitability. For investors seeking more detailed analysis, there are additional InvestingPro Tips available, offering a comprehensive view of Fidelis Insurance’s financial health and market position.

Overall, the InvestingPro data and tips provide favorable evidence supporting Keefe, Bruyette & Woods’ positive stance on Fidelis Insurance and suggest that the stock could be an attractive opportunity for investors considering its valuation metrics and profitability outlook.

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