On Wednesday, BMO Capital adjusted its stance on Kinsale Capital Group Inc (NYSE:KNSL), downgrading the stock from Outperform to Market Perform. The firm, however, increased the price target for Kinsale Capital to $544 from the previous $434.
The decision to downgrade follows Kinsale Capital's significant year-to-date (YTD) performance, where the stock surged 53%, notably outpacing the S&P 500 and its industry peers by 46% and 40%, respectively. BMO Capital cites this rally as the core reason for the rating change.
Despite the downgrade, BMO Capital raised its price target for Kinsale Capital, setting it at a 28x multiple to the firm's 2025 operating income earnings per share (EPS) estimate of $19.42. This estimate sits 7% higher than the consensus. The new price target reflects a more optimistic view of the company's earnings potential.
Kinsale Capital currently trades at approximately 29 times the forward-year price-to-earnings (P/E) consensus, compared to its historical average of 33.6 times. This P/E ratio is a measure of the company's current share price relative to its per-share earnings.
The report from BMO Capital concludes with a detailed reference to the valuation metrics, specifically pointing to exhibit 11 for a comparison of Kinsale Capital's trading multiples against its historical averages. The firm's analysis provides a quantitative basis for the adjustment in the stock's rating and price target.
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