On Monday, Piper Sandler adjusted its price target for Old Republic International (NYSE: NYSE:ORI), increasing it to $41.00 from the previous $39.00. The firm has maintained its Overweight rating on the stock. The revision in the price target is based on the application of new earnings multiples to the company's projected 2026 earnings. This aligns with InvestingPro analysis, which indicates the stock is currently undervalued, supported by strong fundamentals including a 32% year-to-date return and a robust Financial Health Score.
The updated $41.00 price target is derived from applying a 12.2 times multiple to the anticipated 2026 General insurance earnings of $2.90 and a 10.5 times multiple to the expected 2026 Title earnings of $0.44. This new valuation reflects an alignment with the average multiples observed among Old Republic's peers. The company currently trades at a P/E ratio of 10.6x and has maintained dividend payments for 54 consecutive years, according to InvestingPro data, which offers additional insights through its comprehensive Pro Research Report covering 1,400+ US equities.
Previously, the firm's $39.00 price target for Old Republic was calculated using a lower multiple of 11.4 times the forecasted 2026 General insurance earnings of $2.90 and an 11.3 times multiple for the projected 2025 Title earnings of $0.44. The adjustment to the multiples indicates a shift in the firm's valuation approach to better match peer averages.
The Overweight rating suggests that Piper Sandler continues to view Old Republic International favorably in comparison to other stocks within the same sector. This rating indicates an expectation that the stock will outperform the average return of the stocks that Piper Sandler covers over the next 12 to 18 months.
The changes in the price target and the maintenance of the Overweight rating are based on Piper Sandler's analysis of Old Republic's future earnings potential and how it stacks up against competitors in the industry. The firm's methodology incorporates the detailed earnings estimates for the years ahead, ensuring a forward-looking valuation perspective.
InvestingPro data reveals the company has demonstrated strong returns over both the past five and ten years, with analysts predicting continued profitability this year. Additional ProTips and detailed financial metrics are available through the InvestingPro platform.
In other recent news, Old Republic International reported a decrease in its consolidated pretax operating income for the third quarter of 2024, falling to $229 million from $251 million in the same period last year. The company's combined ratio showed a slight increase to 95% from 92%. Despite challenges from high mortgage rates in the Title Insurance sector, the firm maintained a stable combined ratio of 96.7% in this segment.
The company's net operating income also saw a slight decrease, dipping to $183 million. However, Old Republic reported a significant 17% rise in net investment income. The company continued its share repurchase program, buying back $165 million worth of shares during the quarter and an additional $23 million after the quarter ended.
Old Republic is making ongoing investments in technology and specialty underwriting to support long-term growth. The company's management remains optimistic about the growth of the firm's E&S operations and continues to prioritize capital management, balancing business growth and shareholder returns through repurchases and dividends.
According to the management, a recovery in the real estate market is anticipated to begin in late 2025, with more significant impacts expected in 2026.
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