Piper Jaffray Downgrades The Hanover Insurance Group (THG) to Neutral

Piper Jaffray downgraded The Hanover Insurance Group (NYSE: THG) from Overweight to Neutral with a price target of $87.00 (from $91.00) primarily on valuation.

Analyst Daniel Farrell commented, "We are downgrading THG to Neutral from Overweight primarily on valuation as we view risk / reward more balanced given recent strength in the stock. While we expect continued earnings improvement, we do think there are potential near term risks to consider including increasing auto loss frequency trends currently experienced by a number of peers as well as pricing pressures in the Lloyd's marketplace (about 20% of THG business). Our price target of $91 assumes 13x our 2017E EPS estimate (up from 12.5x due to expansion of the overall group) and implies a little over 1.4x TBV one year out. We note that THG could be an attractive acquisition target given its smaller account/specialty lines exposure and there is potential for greater upside in a take out scenario. We put potential downside risk at $79, or 1.3x current TBV."

For an analyst ratings summary and ratings history on The Hanover Insurance Group click here. For more ratings news on The Hanover Insurance Group click here.

Shares of The Hanover Insurance Group closed at $86.58 yesterday.

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