The Hartford Insurance Group Faces Mixed Performance Amid Strong Market Trends
Connecticut-based The Hartford Insurance Group, Inc. (HIG) stands as one of the major multi-line insurance and investment firms in the United States. It offers a range of services including investment products, group life and group disability insurance, property and casualty (P&C) insurance, as well as mutual funds, boasting a market capitalization of $32.5 billion.
Stock Performance Shows Slight Lag Behind Broader Market
Over the past year, shares in HIG have performed closely to the overall market. The company has gained 22.4%, which aligns closely with the S&P 500 Index ($SPX) that rose by 22.3%. However, so far this year, HIG’s stock is up only 2.4%, trailing behind the SPX’s 4% increase.
Comparison to Financial Sector Shows Underperformance
When looking at the Financial Select Sector SPDR Fund (XLF), Hartford’s performance falls short. Over the past 52 weeks, XLF achieved a 32.5% return and saw a 7.2% increase year-to-date, highlighting Hartford’s challenges in keeping pace with its peers.
Latest Earnings Report Spurs Stock Decline
The company’s Q4 earnings results released on January 30 led to a 2.4% drop in share price the following day. On a positive note, The Hartford’s P&C written premiums rose by 7% during the quarter, fueled by growth in both Commercial and Personal Lines. Additionally, improvements in investment yield and solid margins in Group Benefits supported overall earnings.
Concerns Arise Amidst Mixed Earnings Results
Conversely, HIG reported core earnings of $2.94 per share, reflecting a 3.9% decline from the same quarter last year. The increase of $130 million in general liability reserves before tax, prompted by rising settlement costs and legal fees, raised investor worries. The company is also monitoring potential losses from ongoing California wildfires, which could affect its reinsurance strategies, possibly contributing to the stock’s recent decline.
Analysts Anticipate Modest Growth Ahead
Looking to the current fiscal year, which ends in December, analysts forecast a 7.9% year-over-year growth in HIG’s EPS, projecting it will reach $11.11. The firm’s record for beating Wall Street estimates has been mixed; it exceeded expectations in three of its last four quarters but missed in one instance.
Analyst Ratings Reflect Mixed Sentiment
Currently, among the 22 analysts monitoring HIG, the consensus rating is a “Moderate Buy,” comprised of nine “Strong Buy,” two “Moderate Buy,” and eleven “Hold” recommendations. This outlook has improved slightly from three months ago, when eight analysts recommended a “Strong Buy.”
Price Targets Indicate Potential Upside
On February 5, Keefe Bruyette maintained an “Outperform” rating on HIG while boosting its price target to $140, suggesting a potential upside of 25% from current levels. The mean price target stands at $127.70, indicating a 6.4% increase from the current share price, while the highest target of $150 implies a 34% upside potential.
On the date of publication, Neharika Jain did not hold (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
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