On Friday, Evercore ISI adjusted its outlook on Palomar Holdings (NASDAQ:PLMR) shares, increasing the price target to $88 from the previous $86 while maintaining an In Line rating.
The revision follows Palomar's demonstration of strong growth and underwriting in its recent quarterly performance. The firm noted that the attritional loss reported by Palomar was anticipated due to the company's expansion into non-earthquake insurance lines.
The adjusted expense ratio, which outperformed expectations, was highlighted as a significant positive factor. This improvement is believed to be partially due to Palomar's scaling operations as it continues to expand, a trend Evercore ISI considers sustainable. Palomar's Gross Written Premium (GWP) growth, excluding crop insurance, was robust and surpassed estimates, signaling solid operational performance.
While growth in earthquake insurance has decelerated, there has been an uptick in the casualty segment. Despite the uncertainty in the market, Palomar has managed to secure rate increases and has recruited experienced casualty teams to bolster this area of its business.
The overall results were characterized as strong, leading Evercore ISI to raise its estimates for Palomar's performance in 2024 and 2025 by approximately 2%, reflecting higher expected growth and improved expense management.
The new price target of $88 is a direct result of these revised estimates. Evercore ISI's commentary underscores Palomar's ability to execute on growth strategies and maintain strong underwriting, even as it navigates a shifting insurance landscape.
InvestingPro Insights
Recent analysis from InvestingPro highlights several key insights into Palomar Holdings (NASDAQ:PLMR) that align with Evercore ISI's positive stance on the company. One of the standout InvestingPro Tips is Palomar's trading at a low Price-to-Earnings (P/E) ratio relative to its near-term earnings growth, with a current P/E ratio of 24.33 and an adjusted P/E ratio for the last twelve months as of Q1 2024 at 24.53. This suggests that the company's earnings are growing faster than the stock price, potentially indicating an undervalued stock.
Additionally, despite concerns about liquidity, Palomar has demonstrated the ability to cover its short-term obligations, as its cash flows can sufficiently cover interest payments. This is a reassuring sign for investors worried about the company's financial health. Moreover, Palomar has shown a high return over the last year with a 57.1% price total return, bolstered by a 33.08% return over the last three months, which may interest investors looking for robust performance.
InvestingPro Data also reveals that Palomar's revenue growth is robust, with a 19.84% increase in the last twelve months as of Q1 2024, and an even more impressive quarterly revenue growth of 32.88% for Q1 2024. The company's operating income margin stands at a healthy 28.57%, indicating efficient management and profitability.
For those interested in further analysis and additional InvestingPro Tips, there are more tips available on InvestingPro's website, including predictions on profitability and insights into dividend policies. To explore these insights and enhance your investment strategy, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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