The QBE Insurance Group’s share price jumped by 6% to its highest level this year at $9.52 during the lunch trade yesterday, while the S&P/ASX 200 Index (Index:^AXJO) was flat.
The surge in share price came after UBS upgraded the stock from “neutral” to “buy,” while others lifted their stock valuation.
“While a US$1.5 billion loss justifies [about] 40% share price underperformance over the last 12 months, the vast majority of the provisions taken by QBE (US$655 million for COVID-19 claims) are for currently unreported claims,” UBS said, as reported by The Motley Fool. “Further, QBE has provisioned its BI claims to a level that reinsurance protects from any potential developments from here.”
UBS increased its price target from $9 to $10.25 per share, insisting that the underlying trends in QBE’s latest profit announcement were better than initially thought.
Citigroup, Goldman Sachs, and Macquarie Group Ltd (ASX: MQG) also increased their price targets for QBE, with Citigroup raising it from $10.40 to $10.95 a share, and Goldman Sachs from $10.24 to $10.73, and both holding a “buy” rating, according to the Australian Financial Review.
Meanwhile, Macquarie Group lifted its fair value on QBE from $7.70 to $9.40 a share and upgraded its recommendation on the stock from “underperform” to “neutral” due to its positive outlook on the insurer.
“Although no official FY21 guidance was provided, the outlook for margins, premium rates, and now FX are all positive and should provide support for the stock until a new group CEO is appointed,” Macquarie Group said, as reported by the Australian Financial Review.