Scotiabank Scotia’s Phil Hardie cut his Fairfax Financial Holdings Ltd. target to $1,950 from $2,000 with a “sector outperform” rating.
“We remain bullish on Fairfax, but viewed the first quarter result as a bit mixed,” said Mr. Hardie. “Solid operating income (ex-gains) was in line with our expectations and supported our thesis of the improved underlying earnings power of the company. The disappointment from the quarter was book value falling short of expectations and seeing only modest sequential growth. That said, underlying trends were positive and we think the solid operating earnings continue to have a positive read-through for EPS and the pace of BVPS growth going forward. We continue to believe that Fairfax’s current valuation does not reflect the underlying earnings power of the company and remains an attractive opportunity for investors. Fairfax’s strong growth and enhanced interest and dividend investment income yields have led to a substantial rise in its adjusted operating earnings, with 2024 and 2025 likely to reach 4 times higher than the average in the three years leading up to 2020.”