UPDATE: Raymond James Downgrades Argo Group Int'l Holdings (ARGO) to Outperform

Raymond James analyst Gregory Peters downgraded Argo Group Int'l Holdings (NYSE: ARGO) from Strong Buy to Outperform with a price target of $60.00 (from $70.00).

The analyst comments "We are downgrading our rating on the shares of Argo Group International (ARGO) to Outperform from Strong Buy following management’s pre-announcement of the adverse reserve development and goodwill write-off. ARGO expects up to $140M of construction defect PYD from its largely discontinued contract binding GL business along with additional PYD from other parts of the run-off segment. Additionally, the company’s 4Q21 results will include a kitchen sink of other items, including a $40-45M write-down of goodwill along with $20-25M non-operating expenses due in part to the reduction of its UK real estate holdings. While we estimate the total charges could hit EPS by up to $4.05 or more, the press release didn’t include any mention of rating agency or capital concerns. With this announcement, the company will have now reported material adverse PYD in each of the last three years which could weigh on investor confidence and limit the stock’s upside through much FY23. As an offset, management has substantially de-risked the company’s business mix on a go-forward basis and has improved the overall expense structure, which should ultimately lead to better performance. Our rating also recognizes the involvement of activist shareholders and the stock’s inexpensive valuation and attractive yield."

For an analyst ratings summary and ratings history on Argo Group Int'l Holdings click here. For more ratings news on Argo Group Int'l Holdings click here.

Shares of Argo Group Int'l Holdings closed at $51.87 yesterday.

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