On Thursday, Palomar Holdings (NASDAQ:PLMR) stock received an upgrade from a Jefferies analyst, changing its status from Hold to Buy. The firm also increased the price target for Palomar Holdings to $88.00, up from the previous target of $78.00. This adjustment reflects a belief in the company's potential for growth and profitability in the coming year.
The decision to upgrade Palomar Holdings is based on the company's industry-leading Gross Premium Written (GPW) growth across its product lines. Additionally, the analyst pointed to the Net Premium Earned (NPE) growth that appears to be picking up as reinsurance costs have been fully integrated into the business's financial structure.
The analyst cited Palomar's shift toward lower volatility results and its conservative guidance for 2024 as positive signs. Moreover, the company's limited exposure to troubled casualty Accident Years (AYs), which have affected its peers, positions Palomar as an attractive investment opportunity for the year.
The analysis supporting the new price target suggests that a higher multiple for Palomar Holdings is justified. This is based on the re-acceleration of NPE growth, coupled with stable and strong underwriting margins. The new price target of $88.00 represents an 18% upside from the previous target, indicating confidence in the company's financial prospects.
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