On Wednesday, Barclays (LON:BARC) initiated coverage on Skyward Specialty Insurance Group stock, traded on NASDAQ under the ticker SKWD, with an Equal Weight rating and a price target of $44.00.
The firm's analyst cited a valuation method that applies a 2.0x price-to-book value per share (P/BVPS) times accumulated other comprehensive income (xAOCI) multiple on their second quarter 2025 estimated BVPS xAOCI of $21.9.
This estimate is based on a price-to-book value versus return on equity regression, with the expectation that Skyward Specialty will trade at a 60% premium to the regression line.
The analyst's commentary highlighted a positive outlook on the company's strategic focus on becoming an expert underwriter in underserved or niche markets. This strategy is expected to contribute to consistent profitability and potentially a higher valuation over the medium to long term.
However, the analyst also noted that the company is shifting away from commercial auto and more cycle-driven business lines, which may lead to a temporary deceleration in growth.
Despite this potential slowdown, the analyst is not overly concerned, suggesting that the growth in captives could outweigh the effects of the pivot. However, they have opted to maintain a neutral stance for the time being, due to anticipated modest growth and some risk associated with a deeper actuarial review in the fourth quarter, as well as the outcomes related to commercial auto reserves.
In other recent news, Skyward Specialty Insurance Group has formed a strategic joint venture with Bishop Street Underwriters, a subsidiary of RedBird Capital Partners. The collaboration aims to enhance specialty property and casualty insurance offerings, expedite program development, and address the needs of Managing General Agents.
Skyward Specialty has also reported strong Q2 earnings and revenue, surpassing expectations according to Piper Sandler. This has led to an upward revision of price targets by several firms, including Keefe, Bruyette & Woods, BMO Capital Markets, and JMP Securities.
Analysts at William Blair initiated coverage on Skyward Specialty stock with an Outperform rating, while Oppenheimer initiated coverage with a Perform rating, suggesting a neutral stance on the company's near-term prospects.
Skyward Specialty has also navigated issues regarding its reinsurance counterparty's parent company's financial distress, but BMO Capital maintained its Market Perform rating, emphasizing the unaffected status of the subsidiary directly involved with Skyward Specialty.
Finally, Skyward Specialty has announced a secondary public offering of 4,400,000 shares of common stock by The Westaim Corporation. These recent developments provide investors with a snapshot of Skyward Specialty's current activities and financial standing.
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