Bell Potter bumps up QBE price target
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The news: Bell Potter analysts have cut their rating on QBE but bumped up their price target on the stock after the insurance giant reported a steady third quarter last week.
The numbers: The brokerage lifted its price target on QBE to $19.20 from $19.05 previously, but downgraded its rating on the insurer to ‘hold’ from ‘buy’ previously after the recent run-up in the stock.
QBE shares closed at $20 on Friday, having jumped nearly 18% over the last month.
The context: Bell Potter analysts said while the trading update was benign as expected, the share price has risen rapidly.
QBE last week reaffirmed its full-year guidance after growth in gross written premiums on the back of rate increases and higher investment income in the third quarter.
What they said: “While the business seems to be performing well, we feel at $20/share, this is fully reflected in the valuation,” Bell Potter analysts said in justifying the rating downgrade.
While excess capital with the company may lead to higher dividends or share buybacks, “this industry has seen many cycles where excess capital has seen insurers try to grow market share through lower premiums,” they added.
The source: Bell Potter research
