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On Wednesday, prominent financial research firm CFRA raised its price target on Cincinnati Financial (NASDAQ:) to $135 from $122, while maintaining a “buy” rating on the stock. This adjustment reflects a positive outlook for the company's earnings potential and growth trajectory.
Analysts at the company said the increase in the 12-month price target was due to an improvement in the valuation of Cincinnati Financial's stock to 19.4 times the expected 2025 operating earnings per share (EPS), which is also $0.10. The price has been revised upward to $6.95.
Similarly, the 2024 EPS estimate is increased by $0.10 to $6.30, valuing the stock at 21.4 times the 2024 EPS estimate.
The revised target is based on the expectation that Cincinnati Financial will continue to trade at a premium compared to its peer group's average forward multiple of 13x. Still, the target remains conservative compared to the company's three-year average forward multiple of 22x.
The company's premium valuation relative to its peers has historically been justified by its superior sales growth and underwriting performance.
The company has recently overcome challenges to sustain growth levels, and property and casualty premiums are expected to rise, increasing by 7% to 12% in 2024 and 6% to 10% in 2025. It is predicted that.
This follows a 10% increase in the previous year. These growth rates are slightly higher than broader P&C industry expectations and could act as a catalyst for the stock, which currently yields 2.7%.
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