National BankNot bad given that last week, NB downgraded just about every company within their coverage. GLTA
Following a period of outperformance, National Bank Financial analyst Jaeme Gloyn thinks the outlook for the property and casualty (P&C) insurance sector remains “robust.”
In a research note released Monday titled P&C Still The Place To Be, he reiterated his view of the sector being “well positioned for the near term,” pointing to “hard market conditions and rising interest rates that support improved investment income (in particular for FFH).”
“We maintain our view that pricing trends will continue to outpace loss cost trends overall, even for Personal Auto lines, as driving behaviour has yet to complete its path to normalization and auto repair parts price increases still lag U.S. trend,” he added.
Mr. Gloyn thinks “there’s something for everyone” in the sector.
“Small to Mid-Cap Growth? Look to TSU and DFY. Large-Cap Value / GARP? Look to FFH and IFC,” he said.
“That said, the lines of value, GARP, and even momentum, are blurring. TSU remains at the top of our pecking order given a rapid growth outlook but is also an attractive value play with upside to specialty insurance peer valuations. Although one of the best performing Financials stocks year-to-date, FFH, remains the best value idea in our coverage. FFH also offers investors rapid top-line growth and leverage to a higher interest rate environment. As it relates to IFC and DFY, we continue to believe share price acceleration is contingent on proof of execution. We see no reason to adjust our view that both companies will continue to deliver: IFC on integration of RSA and DFY on its strategic growth objective.”
The analyst made a pair of target adjustments to stocks in his coverage universe on Monday:
* Definity Financial Corp. (“outperform”) to $38 from $37. The average on the Street is $37.27.
* Intact Financial Corp. ( “outperform”) to $227 from $230. Average: $207.64.
He maintained a $1,050 target for shares of Fairfax Financial Holdings Ltd. ( “outperform”) and $60 for Trisura Group Ltd. ( “outperform”). The averages are $907.56 and $54.43, respectively.
“DFY (up 15 per cent) is the top performing Financial stock in the S&P/TSX Financials Index year-to-date,” Mr Gloyn said. “FFH (up 9 per cent) and IFC (up 8 per cent) are two of the top four performing stocks. While our top pick in the sector, TSU (down 28 per cent), has lagged considerably following a profit hiccup in Q4-21 results, we expect solid Q2-22 results to firmly set the stock back on an upward trajectory following a massive Q1-22 beat and growth-inspired equity raise ... We reiterate our view TSU’s current trading multiple remains unduly cheap.”