On Monday (NASDAQ:MNDY), BMO Capital maintained its Outperform rating on Trisura Group Ltd . (TSX:TSU:CN) (OTC: TRRSF), but reduced the price target from Cdn$54.00 to Cdn$51.00. The adjustment follows the company's recent earnings report, which presented a mixed outcome with a flat year-over-year top-line and a 5% increase in operating income compared to the third quarter of 2023.
The analyst noted that Trisura's operating earnings per share (EPS) of $0.68 aligned with their expectations and slightly exceeded the consensus estimate of $0.67. The performance was attributed to a strong showing from Trisura Specialty's underwriting income, which helped to balance out weaker results from the U.S. Programs segment. Additionally, the company's U.S. Surety business was highlighted as a positive, contributing to half of Trisura Specialty's Surety premiums.
Despite these strengths, BMO Capital anticipates challenges ahead as Trisura repositions itself for more non-fronting related growth in the U.S., which is expected to be a gradual process. Due to the weaker performance of U.S. Programs, the firm has slightly lowered its 2025 operating EPS estimate by 1%.
The revised price target of Cdn$51.00 is based on a 2.75 times multiple of the estimated book value for the third quarter of 2025. BMO Capital finds this multiple attractive, especially in light of Trisura's 17% return on equity (ROE). The decision to move away from a sum-of-the-parts (SOTP) valuation method was also mentioned as a factor in the new target price.
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