Canaccord reiterates 'buy' on Beazley, raises target price
Canaccord Genuity reiterated a ‘buy’ rating for Beazley and raised its target price to 450p from 415p after the insurer reported its half year results.
Beazley
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16:45 19/04/24
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The Lloyd’s of London insurer last Friday reported a drop in first half pre-tax profit to $150.2m from $154.5m the same period a year ago, although the figure was above consensus forecasts for $143m.
Gross written premiums increased 2% to $1.12bn and the company had a combined ratio of 90% versus 86% at 30 June 2015. The dividend was raised 6% to 3.5p.
Canaccord said the “strong” first half was helped by gains on bonds and diversification in specialty lines.
“The around 5% pre-tax profit beat to consensus looks to have come from a very strong investment result, with underwriting profits in-line with our forecast on a 90% combined ratio, in-line with the long-run track record,” said Canaccord analyst Ben Cohen.
“The 6% increase in the interim dividend was in-line with forecast, although the company cautioned that a higher proportion of growth from Specialty would increase the growth in capital required to double digit in coming years.”
Cohen added: “Beazley continues to look attractively valued versus US specialty peers on high teen multiples, and reasonable value against Lloyd’s peers, with only 6% of its business covering UK domestic risks, for an attractive 5% yield (including Special).”
Shares rose 1.87% to 397p at 1011 BST.