BofA Securities analyst Joshua Shanker downgraded Chubb Limited (NYSE:CB) to Underperform from Neutral, while raising the price target to $275 from $264.
The analyst downgraded the stock after a period of strong outperformance (up 29% YTD and 41% over the past year) in CB shares and the broader P&C sector.
The analyst writes that over the past decade, Chubb's book value per share (BVPS), tangible BVPS, and EPS grew at CAGRs of 7%, 5%, and 10%, respectively—lower than peers despite a premium valuation.
Although growth accelerated to 15%, 17%, and 14% over the last year, it still lagged behind peers as P&C underwriting margins peaked, adds the analyst.
Shanker says the company's slower growth stems from lower operating leverage, a focus on premium-to-book acquisitions, and less efficient share repurchases at higher valuations.
The analyst's 2025 forecast of 6% EPS growth and 12% BVPS growth is below consensus and at the lower end of peer expectations, with some peers poised for 20%+ BVPS growth.
Notably, the analyst's estimates for 2025 and 2026 EPS forecasts dip slightly due to higher share prices for repurchases following stock outperformance.
However, Shanker's third-quarter EPS estimate rose by nearly $0.20 per share as they lowered expectations for catastrophe losses.
The analyst projects third-quarter catastrophe activity at 7.7% of Global P&C earned premiums, below the typical 9%, with no major events.
Investors can gain exposure to the stock via iShares U.S. Insurance ETF (NYSE:IAK) and Invesco KBW Property & Casualty Insurance ETF (NASDAQ:KBWP).
Price Action: CB shares are up 0.52% at $290.05 at the last check Friday.
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