After an FY21 performance update, Morgans lifts FY21 and FY22 EPS estimates by 17% and 4%, and raises the target price to $11.83 from $10.78. The Add rating is maintained.
The broker highlights first quarter combined operating ratio (COR) was considered in-line with market expectations and gross written premiums (GWP) growth on the pcp was13%. The latter is considered to show recent rate increases are flowing through to GWP.
The COR result was a better outcome than the analyst expected given numerous known weather events in the quarter. A decision to adopt a slightly shorter asset duration versus the length of the group’s liabilities has seen an over $70m mark-to-market (MTM) gain.
Target price is $11.83.Current Price is $10.78. Difference: $1.05 – (brackets indicate current price is over target). If QBE meets the Morgans target it will return approximately 9% (excluding dividends, fees and charges – negative figures indicate an expected loss).