On Wednesday, CFRA maintained its Buy rating on Hartford Financial Services (NYSE:HIG) and increased the stock's price target from $105.00 to $115.00. The firm's analyst cited the property-casualty insurer's potential for operating revenue growth and improvements in underwriting results as reasons for the raised target price.
The new price target represents a valuation of the shares at 10 times the firm's 2025 operating earnings per share (EPS) estimate, which has been adjusted upward by $0.05 to $11.45. It also values the stock at 11.4 times the updated 2024 operating EPS estimate of $10.05, an increase of $0.15 from the previous estimate. These multiples compare to a three-year average forward multiple of 10 times and a peer average of 15.3 times.
CFRA's analysis suggests that Hartford Financial Services is currently undervalued when compared to its peers. This assessment is based on the insurer's current share price, which trades at roughly 8.7 times CFRA's 2025 operating EPS estimate, coupled with a dividend yield of 1.9%.
The firm anticipates that Hartford Financial Services will achieve an operating revenue growth of 8%-12% in both 2024 and 2025. This growth rate is projected to be higher than many of the company's peers. Additionally, the analyst expects that Hartford will see an improvement in its underlying property-casualty underwriting results, which could act as a catalyst for the stock to narrow its valuation gap with peer companies.
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