JMP Securities downgrades Heritage Insurance stock on valuation By Investing.com
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On Wednesday, JMP Securities adjusted its stance on Heritage Insurance Holdings (NYSE:), moving the stock from a “Market Outperform” rating to a “Market Perform” status. This decision follows Heritage’s substantial outperformance relative to JMP Securities’ previous price target of $7. The company’s shares have recently traded significantly above this target, prompting the firm to reassess the stock as fairly valued.
Heritage Insurance reported a strong fourth quarter for 2023, with an operating earnings per share (EPS) of $1.17, which exceeded JMP Securities’ estimate of $0.48 and the consensus of $0.46.
The better-than-expected results were attributed to lower-than-anticipated weather-related and catastrophe losses, as well as a more favorable expense ratio. However, these positives were slightly offset by a higher-than-expected ex-catastrophe accident year loss ratio and adverse prior period development.
The insurer’s book value per share reached $7.29, surpassing JMP Securities’ estimate of $7.00 and marking a 29% increase from September 31. Despite the stock’s current trading at approximately 1.7 times tangible book value and around 7 times the projected earnings for 2024, which is below the peer median in both metrics, Heritage has seen its shares rise by 168% over the past year, compared to a 33% increase for the Russell 3000.
The re-rating of Heritage Insurance’s shares is seen as justified by JMP Securities, given the company’s performance. However, the firm indicates difficulty in justifying a new price target that would suggest sufficient upside, given the current share price. As a result, the analyst believes that the shares are now fairly valued, leading to the downgrade to “Market Perform.”
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
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© Reuters.
On Wednesday, JMP Securities adjusted its stance on Heritage Insurance Holdings (NYSE:), moving the stock from a “Market Outperform” rating to a “Market Perform” status. This decision follows Heritage’s substantial outperformance relative to JMP Securities’ previous price target of $7. The company’s shares have recently traded significantly above this target, prompting the firm to reassess the stock as fairly valued.
Heritage Insurance reported a strong fourth quarter for 2023, with an operating earnings per share (EPS) of $1.17, which exceeded JMP Securities’ estimate of $0.48 and the consensus of $0.46.
The better-than-expected results were attributed to lower-than-anticipated weather-related and catastrophe losses, as well as a more favorable expense ratio. However, these positives were slightly offset by a higher-than-expected ex-catastrophe accident year loss ratio and adverse prior period development.
The insurer’s book value per share reached $7.29, surpassing JMP Securities’ estimate of $7.00 and marking a 29% increase from September 31. Despite the stock’s current trading at approximately 1.7 times tangible book value and around 7 times the projected earnings for 2024, which is below the peer median in both metrics, Heritage has seen its shares rise by 168% over the past year, compared to a 33% increase for the Russell 3000.
The re-rating of Heritage Insurance’s shares is seen as justified by JMP Securities, given the company’s performance. However, the firm indicates difficulty in justifying a new price target that would suggest sufficient upside, given the current share price. As a result, the analyst believes that the shares are now fairly valued, leading to the downgrade to “Market Perform.”
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
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