On Wednesday, TD (TSX:TD) Cowen maintained a Buy rating on Hartford Financial Services (NYSE:HIG) and increased the price target to $144 from $135.
The firm's revised price target reflects an adjustment in the 2024 and 2025 earnings estimates for the company. The new estimates are set at $9.95 and $12.03 respectively, raised from the previous $9.56 and $11.63. These adjustments come after the analyst revised the expected catastrophe losses in both Property & Casualty (P&C) Commercial and Personal Lines downwards.
Furthermore, a modest decrease in the underlying combined ratio for P&C Commercial Lines for 2024 and the expected loss ratios in Group Benefits were factored into the new estimates.
The analyst's updated estimates differ from the consensus, which predicts 2024 and 2025 earnings of $10.09 and $11.44 respectively. The increased price target is also attributed to higher peer benchmarks and slightly improved earnings projections. TD Cowen employs a sum-of-the-parts analysis of the 2025 adjusted earnings, applying segment multiples that are informed by peer valuations to determine the valuation of Hartford Financial Services.
In addition to the revised price target and earnings estimates, TD Cowen has named Hartford Financial Services as one of its 'Top Picks'. This selection places HIG alongside other favored stocks such as ACGL and KMPR. This endorsement suggests a positive outlook on the company's performance in comparison to its peers.
The adjustments made by TD Cowen indicate a positive sentiment towards Hartford Financial Services' potential to outperform in the market. The firm's analysis suggests that Hartford's operational changes and comparative valuation within the sector provide a basis for the raised price target and the sustained Buy rating.
InvestingPro Insights
As Hartford Financial Services (NYSE:HIG) captures the attention of analysts, recent data from InvestingPro bolsters the positive sentiment surrounding the company. The firm's commitment to shareholder returns is evident, with HIG raising its dividend for 11 consecutive years and maintaining dividend payments for 29 consecutive years. This consistent dividend history is a testament to the company's stability and reliability for income-focused investors.
The company's financial health is also highlighted by a P/E ratio of 12.61 and an even more attractive adjusted P/E ratio of 12.22 for the last twelve months as of Q4 2023. This valuation metric, when paired with a PEG ratio of just 0.27 for the same period, suggests that the stock may be trading at a low price relative to its near-term earnings growth potential—a noteworthy detail for value investors.
Moreover, HIG's liquidity position is robust, with liquid assets surpassing short-term obligations, providing a cushion for operational flexibility. With solid revenue growth of 9.83% in the last twelve months as of Q4 2023 and a strong return of 25.77% over the last three months, the company's financial performance aligns with the optimistic outlook presented by TD Cowen.
For investors seeking more comprehensive analysis and additional insights, there are over 10 InvestingPro Tips available, which can be accessed by visiting: https://www.investing.com/pro/HIG. These tips delve deeper into the company's performance and future prospects. Furthermore, for those interested in upgrading to a yearly or biyearly Pro and Pro+ subscription, use coupon code PRONEWS24 to receive an additional 10% off.
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