National Bank Ahead of first-quarter earnings season for Canadian diversified financial companies, National Bank Financial analyst Jaeme Gloyn reaffirmed his “favourable” view on Property and Casualty (P&C) insurance providers.
“We believe the sector remains well positioned for the near term given persistent hard market conditions, still lower inflationary pressures in Canada vs. the U.S., and two favourable book value per share drivers inQ1-23 - IFRS 17 and favourable capital markets,” he said. “Our pecking order shifts slightly as FFH moves to the top, followed by DFY, TSU and IFC. While we remain long-term positive on one of our 2023 Top Picks, Trisura, we believe share price upside will be constrained near term as management proves out the stability and consistency of strong core operating performance. Thus, our top value idea FFH moves to the top while we believe DFY’s near-term catalysts (e.g., CBCA conversion and M&A) drive a more compelling relative valuation vs. IFC (DFY trades at 1.8x P/B compared to IFC’s 2.6x).”
Mr. Gloyn raised his target for Fairfax Financial Holdings Ltd. , which he sees as the “top value idea” in his coverage universe, to $1,350 from $1,300, keeping an “outperform” rating. The average is $1,211.31.
His other target adjustments for P&C firms are: Definity Financial Corp. (“outperform”) to $51 from $48 and Intact Financial Corp. ( “outperform”) to $242 from $240. The averages are $43.50 and $220.64.