On Monday, Jefferies made a slight adjustment to Hartford Financial Services' (NYSE:HIG) price target, bringing it down to $126.00 from the previous $127.00. Despite this change, the firm has decided to maintain a Hold rating on the stock. The revision followed Hartford Financial's third-quarter earnings for 2024, where the company reported a core earnings per share (EPS) of $2.53. This figure represents a 10% increase year-over-year but fell short of Jefferies' and consensus expectations, which were $2.58 and $2.54 respectively.
The shortfall in earnings was largely attributed to the Commercial Property & Casualty (Comm'l P&C) segment, which experienced a higher underlying loss ratio and less favorable prior year development (PYD) than anticipated by Jefferies. The firm acknowledged that these results were primarily due to increased general liability (GL) loss picks.
In light of these results, Jefferies has adjusted its expectations for Hartford Financial's future loss ratios. The analyst noted improvements in the Personal segment, although the pace of improvement was not as rapid as that seen in the coverage peers. Meanwhile, the Group Benefits (GB) segment continued to exhibit strong margins, but this positive was somewhat tempered by modest growth.
The Hold rating remains in place for Hartford Financial, with the price target now set at $126.00. This new target reflects a 14% expected total return (ETR) for the stock. The firm's outlook takes into account the mixed performance across the company's various segments and the recent quarterly earnings miss.
In other recent news, Hartford Financial Services Group (NYSE:HIG) Inc. reported promising third-quarter results for 2024 despite facing challenges from Hurricanes Milton and Helene. The insurance and financial services company noted a significant increase in its Commercial and Personal Lines growth, with core earnings reaching $752 million, or $2.53 per diluted share. Additionally, the company reported a core earnings return on equity (ROE) of 17.4% for the trailing 12 months.
Hartford Financial also experienced a 9% increase in Commercial Lines top-line growth and a 12% rise in Personal Lines. The company announced an 11% dividend increase, effective January 3, 2025, continuing its tradition of annual increases. Meanwhile, catastrophe losses for the current year were calculated at $247 million before tax, with estimates from Hurricane Milton ranging between $65 million and $110 million pretax.
Despite a higher loss ratio in global reinsurance due to losses in Latin America, Hartford Financial remains optimistic about future growth and profitability. The company is on track to meet its $300 million goal for Excess & Surplus (E&S) binding by year-end. However, sales growth in Group Benefits appears weak year-over-year, marking one of the recent developments in the company's performance.
InvestingPro Insights
To complement Jefferies' analysis of Hartford Financial Services (NYSE:HIG), recent data from InvestingPro offers additional context. Despite the slight reduction in the price target, HIG's financial metrics suggest a strong underlying performance. The company's P/E ratio of 11.26 and P/E ratio (Adjusted) of 10.84 for the last twelve months as of Q3 2024 indicate that the stock may be undervalued relative to its earnings potential. This is further supported by an InvestingPro Tip highlighting that HIG is trading at a low P/E ratio relative to its near-term earnings growth.
Moreover, HIG has demonstrated robust financial health and shareholder value. The company has raised its dividend for 12 consecutive years and maintained dividend payments for 29 years, as noted by InvestingPro Tips. This commitment to dividend growth is reflected in the impressive dividend growth rate of 22.35% over the last twelve months ending Q3 2024.
While Jefferies points out challenges in the Commercial P&C segment, it's worth noting that HIG's revenue growth remains positive at 7.92% for the last twelve months as of Q3 2024. Additionally, the company's EBITDA growth of 20.07% over the same period suggests improving operational efficiency.
For investors seeking more comprehensive analysis, InvestingPro offers 11 additional tips for Hartford Financial Services, providing a deeper understanding of the company's financial position and market performance.
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