In a report released on March 28, Michael Zaremski from BMO Capital maintained a Hold rating on W. R. Berkley Corporation (WRB – Research Report), with a price target of $66.00.
Michael Zaremski has given his Hold rating due to a combination of factors, including the recent acquisition of a 15% stake in W. R. Berkley Corporation by Japanese insurer Mitsui Sumitomo. This acquisition could indicate a potential for a future takeover, which has led to a 10% increase in the target price to account for a possible takeover premium. However, the current aggressive reserves relative to peers and the potential for only modest margin improvements compared to competitors contribute to the Hold rating.
Additionally, while W. R. Berkley is expected to experience double-digit top-line growth over the next 12-18 months, the ongoing small reserve additions to older vintages are likely to limit margin improvements. The investment by Mitsui Sumitomo may provide some reassurance regarding the company’s reserves, but the overall outlook remains cautious. Therefore, the combination of these elements supports the decision to maintain a Market Perform rating.
In another report released today, KBW also maintained a Hold rating on the stock with a $64.00 price target.