BMO Capital analyst Tom Mackinnon maintained a Hold rating on Definity Financial Corp. (DFY – Research Report) yesterday and set a price target of C$63.00.
Tom Mackinnon has given his Hold rating due to a combination of factors impacting Definity Financial Corp. The company recently announced significant catastrophe (CAT) losses of $50 million, which is considerably higher than previous estimates. These losses, primarily due to severe weather conditions in regions like Ontario and Quebec, have led to a downward revision of the company’s Q1/25 operating EPS estimate by 17%.
Despite these challenges, Mackinnon acknowledges that Definity Financial Corp. is well-positioned for growth due to its scalable platform, which could enhance underwriting profitability. However, the current valuation of the company, at 2.1 times book value, already accounts for its projected 11% operating return on equity for 2025. This valuation, combined with the potential benefits from the deployment of the company’s excess capital, supports the decision to maintain a Hold rating.
DFY’s price has also changed moderately for the past six months – from C$52.510 to C$61.250, which is a 16.64% increase.