Multiple Upgrades A group of analysts on the Street hiked their targets for Intact Financial Corp. following the release of better-than-anticipated second-quarter results.
Late Wednesday, Intact reported net operating earnings per share of $3.26, easily exceeded the Street’s forecast of $2.37.
“All four operating divisions posted underwriting profit above our estimates. The outperformance was mainly driven by higher positive prior-year reserve developments (PYRD), lower CAT losses, higher distribution income and a higher contribution from RSA,” said Desjardins Securities’ Doug Young.
He raised his target to $190 from $185 with a “buy” rating. The average is $193.82.
“We like IFC’s high-quality management, the RSA acquisition and near-term market outlook. That said, as conditions return to normal, it faces a tough comp in 2022,” he added.
Others making changes include:
* BMO Nesbitt Burns’ Tom MacKinnon to $200 from $190 with a “outperform” rating.
“Superior market positioning, strong defensive characteristics, its already exceptional competitive advantage in data analytics and a management team that continues to deliver, we see no reason why IFC’s premium multiple should abate, especially as it delivers on the RSA acquisition. We see target multiple appreciation as IFC, a proven acquirer, delivers, especially in these favourable P&C markets,” said Mr. MacKinnon.
* Scotia Capital’s Phil Hardie to $193 from $190 with a “sector outperform” rating.
“Despite the upside surprise, the stock response was tepid as investors appear to be hesitant to reward exceptional operating performance until conditions normalize. The combination of mild weather, low catastrophe losses, reduced driving frequency, and favourable prior year reserve releases, all contributed to the much stronger than expected underwriting profitability. That said, we believe the Intact team (and stock) deserve more credit for the stellar performance,” said Mr. Hardie.
* CIBC’s Paul Holden to $197 from $188 with an “outperformer” rating.
* RBC’s Geoffrey Kwan to $197 from $196 with an “outperform” rating.
* Raymond James’ Stephen Boland to $193 from $190 with a “strong buy” rating.