UPDATE: Raymond James Starts Cincinnati Financial (CINF) at Market Perform
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Raymond James analyst C. Gregory Peters initiates coverage on Cincinnati Financial (NASDAQ: CINF) with a Market Perform rating.
The analyst comments "We are initiating coverage on Cincinnati Financial Corporation (CINF) with a Market Perform rating. The stock has underperformed QTD, down 21.5% (S&P 500: -0.9%) reflecting in part disappointing 2Q22 results primarily due to the near-term challenges associated with increasing reserves for rising severity trends. CINF has reported sequential growth in reserves above the peer group average in three out of the last four quarters, with net additions to reserves totaling $414M in 1H22, which is reflective of a cautious reserving philosophy consistent with the company’s long-term record of reporting favorable reserve development for 33 consecutive years. Looking ahead, we expect CINF to grow its business in a challenging macro environment through increasing its market share in its existing independent agency distribution network and reporting gradual improvements in ROE as benefits from previous rate increases lead to lower/stable loss ratios. Additionally, we believe CINF’s better-than-peer expense ratio could serve as a modest structural advantage to underwriting results over the next several years. Our Market Perform rating primarily reflects our view that the stock’s valuation reflects CINF’s specialty position and the company’s below-peer average ROE. Our rating also reflects the company’s record of increasing its common dividend for 61 consecutive years, which we expect to continue in 2022, 2023, and 2024. Our suitability rating of Moderate Risk/Income primarily reflects the company’s stable results and history of consecutive increases in regular dividends."
Shares of Cincinnati Financial closed at $92.99 yesterday.
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