Canaccord reiterates 'buy' on Beazley, raises target price

25th Jul 2016 09:55

(ShareCast News) - Canaccord Genuity reiterated a 'buy' rating for Beazley and raised its target price to 450p from 415p after the insurer reported its half year results.The Lloyd's of London insurer last Friday reported a drop in first half pre-tax profit to $150.2m from $154.5m the same period a year ago, although the figure was above consensus forecasts for $143m.Gross written premiums increased 2% to $1.12bn and the company had a combined ratio of 90% versus 86% at 30 June 2015. The dividend was raised 6% to 3.5p.Canaccord said the "strong" first half was helped by gains on bonds and diversification in specialty lines."The around 5% pre-tax profit beat to consensus looks to have come from a very strong investment result, with underwriting profits in-line with our forecast on a 90% combined ratio, in-line with the long-run track record," said Canaccord analyst Ben Cohen."The 6% increase in the interim dividend was in-line with forecast, although the company cautioned that a higher proportion of growth from Specialty would increase the growth in capital required to double digit in coming years."Cohen added: "Beazley continues to look attractively valued versus US specialty peers on high teen multiples, and reasonable value against Lloyd's peers, with only 6% of its business covering UK domestic risks, for an attractive 5% yield (including Special)."Shares rose 1.87% to 397p at 1011 BST.