Is Wall Street Bullish or Bearish on Arch Capital Stock?
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Valued at $33.9 billion by market cap, Pembroke, Bermuda-based Arch Capital Group Ltd. (ACGL) together with its subsidiaries, provides insurance, reinsurance, and mortgage insurance products in the U.S, Canada, Bermuda, the U.K., Europe, and Australia.
The insurance giant has significantly underperformed the broader market over the past year. ACGL stock has plunged 10.8% over the past 52 weeks and 1.8% on a YTD basis, compared to the S&P 500 Index’s ($SPX) 16.4% gains over the past year and 9.7% returns on a YTD basis.
Narrowing the focus, Arch Capital has also underperformed the sector-focused Financial Select Sector SPDR Fund’s (XLF) 20.7% surge over the past 52 weeks and 8.6% gains on a YTD basis.
Despite reporting better-than-expected results, ACGL stock prices observed a marginal dip in the trading session following the release of its Q2 results on Jul. 29. The company showed a disciplined underwriting approach along with dynamic capital management, which pushed its net premiums written up by 15% year-over-year to $4.35 billion, surpassing Street expectations. Further, underwriting income grew 7.3% year-over-year to $818 million. Moreover, the company’s adjusted EPS for the quarter came in at $2.58, 11.7% ahead of the consensus estimates. Following the initial dip, ACGL stock prices maintained a positive momentum for the next five trading sessions.
For the full fiscal 2025, ending in December, analysts expect ACGL to deliver an adjusted EPS of $8.12, down 12.5% year-over-year. On a positive note, the company has a robust earnings surprise history. It has surpassed the Street’s bottom-line projections in each of the past four quarters by notable margins.
The stock maintains a consensus “Moderate Buy” rating overall. Of the 19 analysts covering the stock, opinions include 10 “Strong Buys,” eight “Holds,” and one “Strong Sell.”
This configuration is marginally more optimistic than a month ago, when nine analysts gave “Strong Buy” recommendations.
On Aug. 14, Keefe, Bruyette & Woods analyst Meyer Shields maintained a “Market Perform” rating on ACGL and raised the price target from $102 to $103.
As of writing, ACGL’s mean price target of $107.76 suggests an 18.8% upside potential. Meanwhile, the street-high target of $125 represents a 37.8% premium to current price levels.
On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.