On Monday, JPMorgan made an adjustment to Palomar Holdings' (NASDAQ:PLMR) financial outlook, raising the stock price target to $94.00 from the previous $91.00. The firm has reiterated its Neutral stance on the insurance holding company's stock. This change follows Palomar's recent announcement of a successful secondary share offering and its plans for the use of the proceeds.
Palomar Holdings disclosed its second-quarter earnings for 2024 on Sunday, August 5, 2024, and conducted a conference call the next day. Later in the week, on Thursday, August 8, 2024, the company revealed an offering of 1.2 million primary shares. The offering, which was priced at $88 per share, closed successfully that evening, with J.P. Morgan serving as an advisor.
The net proceeds from the offering, totaling $115 million including the greenshoe option, are earmarked for strategic financial moves. Specifically, $25 million is set aside for the acquisition of First Indemnity of America, a surety insurer, with an expected completion date in late 2024 or early 2025. The remaining funds will be directed towards general corporate purposes, which encompass organic growth initiatives.
The stock price target increase by JPMorgan reflects an updated earnings per share (EPS) estimate for Palomar Holdings. The revised target accounts for heightened adjusted net income projections, although it also considers the dilutive impact of the new equity issued. The company's strategic expansion and financial management appear to be key factors influencing JPMorgan's updated valuation of Palomar's stock.
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