Analysts at Berenberg raised their target price on insurance firm Hiscox from 973.0p to 1,000.0p on Wednesday, stating “all roads lead to profitable growth”.
Berenberg stated Hiscox’s strong set of interim results, which comfortably beat analysts’ expectations by 76% on a pre-tax profit basis, were “a stark reminder” that the London Market as a sub-sector had “significantly more earnings power” than two or three years ago.
Having weathered “the Covid-19 business interruption storm” in 2020 and repositioned its big-ticket portfolio, in Berenberg’s view odds were that Hiscox could now “continue on the path of profitable growth”.
The German bank said Hiscox management struck a bullish tone during the group’s earnings call regarding the outlook for the company, particularly on opportunities in its retail segment and across “the vast and highly fragmented US direct market of $130.0bn”.
“In our view, management did an impressive job reminding the market that Hiscox’s head start and strong competitive advantages built up over a span of ten years mean it is now uniquely positioned to continue to grow ahead of peers in a not-so-winner-take-all market, which itself is structurally growing, boosted by tailwinds such as acceleration of digital adoption and the US economic recovery,” said Berenberg.
However, the analysts, which stood by their ‘hold’ rating on the stock, noted that although they were becoming “increasingly more positive”, the market looks to have priced in the recovery to a large extent.
