CFRA has increased its price target for W.R. Berkley Corporation (NYSE: WRB) shares from $62.00 to $67.00 while maintaining a Buy rating on the stock.
The new target price is based on a valuation of 14.4 times CFRA's 2026 operating earnings per share (EPS) estimate of $4.65 and 15.5 times their 2025 EPS estimate of $4.33.
This valuation compares to the five-year average forward multiple of 16.8 times and the peer average of 14 times.
The firm slightly lowered its 2024 EPS estimate for W.R. Berkley by $0.02 to $4.08 following the company's third-quarter earnings report. W.R. Berkley reported a Q3 EPS of $0.93, which was above the $0.90 reported in the same quarter last year but below CFRA's estimate of $0.95 and the consensus estimate of $0.92.
The company's operating revenues increased by 11% during the quarter, driven by a 10.8% rise in premiums and a 20% increase in investment income, despite a decrease in non-insurance revenues.
In other recent news, W.R. Berkley Corporation reported a record net income of $366 million in Q3 2024, a nearly 10% increase from the previous year. The company's operating earnings were $374 million, or $0.93 per share, surpassing the Visible Alpha Consensus estimate of $0.91. However, the company's net premium written growth did not meet analyst forecasts, registering around 7% growth compared to the 10% expected.
Analyst firms have revised their outlooks on W.R. Berkley, with Keefe, Bruyette & Woods reducing its price target to $58.00, TD Cowen maintaining a Buy rating with a steady price target of $68.00, and RBC Capital Markets adjusting its price target to $63.00. Goldman Sachs (NYSE:GS) maintained a Neutral rating with a steady price target of $61.00, while Evercore ISI increased its target price to $60.00, maintaining its "In Line" rating.
The company projects an annual revenue growth of 10% to 15% and anticipates sustained growth in underwriting margins and investment income. However, Evercore ISI expressed skepticism about W.R. Berkley achieving its growth target in the fourth quarter of 2024, aligning more with a conservative growth outlook.
InvestingPro Insights
To complement CFRA's analysis, InvestingPro data offers additional insights into W.R. Berkley's financial performance and market position. The company's market capitalization stands at $22.17 billion, reflecting its significant presence in the insurance industry. W.R. Berkley's P/E ratio of 15.66 aligns closely with CFRA's forward valuation estimates, suggesting the stock is reasonably priced relative to earnings.
InvestingPro Tips highlight W.R. Berkley's strong financial health and consistent performance. Notably, the company has maintained dividend payments for 50 consecutive years, demonstrating a commitment to shareholder returns. This is further supported by a current dividend yield of 2.11% and an impressive dividend growth of 28.82% over the last twelve months.
The company's revenue growth of 10.53% over the last twelve months and 12.2% in the most recent quarter aligns with CFRA's projections for continued strong growth. Additionally, W.R. Berkley's return on assets of 4.21% indicates efficient use of its assets to generate profits.
For investors seeking more comprehensive analysis, InvestingPro offers 7 additional tips for W.R. Berkley, providing a deeper understanding of the company's financial position and market outlook.
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