Model update: remain Underweight
We are updating our CB model to reflect Q4 results and management commentary regarding the 2018 outlook. As a result, we have increased our FY18 EPS forecast by 3% and our FY19 EPS forecast by 6%. While premium growth trends were disappointing in 4Q17, this was more than offset by good underwriting quality. With pricing trends improving, management appears confident that profitability will continue to improve in 2018. Our valuation and price target increases to $135 (from $120) as we have rolled forward our valuation models. With the stock trading on 1.3x book value with a sub-10% operating ROE we retain our Underweight recommendation.
Formed in 2003 by an established team from Cazenove, one of the most respected investment banks in the UK, Atlantic Equities conducts and publishes fundamental, bottom up research on mid and large cap US companies.
Atlantic provide order execution through a wide range of DMA products and algorithmic trading suites.
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