On Monday, Keefe, Bruyette & Woods adjusted its price target for Fidelity National (NYSE:FNF), a major player in the title insurance sector, to $55 from the previous target of $56. The firm has maintained its Market Perform rating on the stock.
The revision follows Keefe, Bruyette & Woods' reassessment of Fidelity National's growth and margin forecasts. The firm now expects Fidelity National to see slower growth in its Fidelity Guaranty (FG) business and anticipates a slight decrease in title margins. Consequently, the firm has revised its earnings estimates for the years 2024 and 2025 to $4.72 and $5.50 per share, down from the earlier projections of $4.85 and $5.66, respectively.
The new price target is based on a valuation that applies a 12.5 times multiple to the title earnings, which is consistent with the multiples of Fidelity National's industry peers. A 6 times multiple is used for FG earnings, both calculated using the projected earnings per share for 2025.
Fidelity National's management, in a recent earnings call, indicated that they anticipate the margin to be in the low-to-mid teens range for the remaining quarters of 2024. In response, Keefe, Bruyette & Woods has slightly lowered its margin estimates for 2024 and 2025 to 14.2% and 15.1%, respectively, representing an annual decline of roughly 10 basis points.
Despite these adjustments, Keefe, Bruyette & Woods acknowledges Fidelity National's solid performance in the first quarter. However, the firm's outlook is tempered by the expectation that volume recovery will be modest in the years 2024 to 2025.
InvestingPro Insights
As investors digest the revised price target and earnings estimates from Keefe, Bruyette & Woods for Fidelity National (NYSE:FNF), it's worth considering additional data and insights. According to real-time metrics from InvestingPro, Fidelity National boasts a market capitalization of $14.06 billion and trades at a P/E ratio of 16.88. Notably, the company's revenue growth over the last twelve months as of Q1 2024 stands at an impressive 15.67%, signaling robust business performance.
InvestingPro Tips also highlight that Fidelity National has raised its dividend for 12 consecutive years, indicating a commitment to returning value to shareholders. Furthermore, the company's high return over the last year, with a price total return of 56.49%, suggests that investors have been rewarded for their confidence in the firm. For those looking to delve deeper into Fidelity National's financial health, InvestingPro offers additional tips and insights, including the fact that Fidelity National's liquid assets exceed its short-term obligations, underscoring the company's financial stability. To explore more InvestingPro Tips related to Fidelity National, visit https://www.investing.com/pro/FNF.
Investors considering Fidelity National as part of their portfolio may find these insights particularly valuable, especially when used in conjunction with the analysis provided by Keefe, Bruyette & Woods. For a more comprehensive investment analysis, take advantage of a special offer using coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro, where 9 more tips await to guide your investment decisions.
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