Is Markel Poised To Rise 20%? Barron's Thinks So
Tweet
Share
E-mailGet Alerts MKL Hot Sheet
Join SI Premium – FREE
Markel (NYSE: MKL) has doubled its net worth and stock price every five years since going public in 1986. Markel is an insurance company that likes to compete in noncompetitive niche markets such as insuring horses, day-care centers, dude ranches, beauty salons and taverns.
Markel's stock has been under pressure because of a downturn in the property-casualty industry, characterized by price cutting and the relaxation of policy terms and conditions. Markel is losing some business because of its refusal to cut premiums to what it thinks are unsafe levels.
Its gross written premiums last year of $2.4 billion were down 7% from 2006, while this year's first quarter saw a 9% decline from the year-ago period. Veteran insurance analyst Elizabeth Malone of KeyBanc Capital Markets still likes Markel and has a Buy on the stock, with a 12-month target price of $485.
Historically, Markel has traded at 1.3 times to 2.5 times its estimated year-ahead book value. Malone arrives at 485 by assuming that Markel will move up from a current price of 1.5 times to 1.7 times her estimate of year-end 2008 book value of $287.37 a share, and to 15.5 times her 2008 earnings per share estimate of $31.39.
Markel believes the recent downturn in pricing may be far shorter-lived than the multiyear premium drop in the 1990s. If insurance industry pricing improves, Barron's said that shares of Markel could jump over 20%.
Sign up at EasyStockAlerts.com To Be Alerted To Your Stock News Today!
Markel's stock has been under pressure because of a downturn in the property-casualty industry, characterized by price cutting and the relaxation of policy terms and conditions. Markel is losing some business because of its refusal to cut premiums to what it thinks are unsafe levels.
Its gross written premiums last year of $2.4 billion were down 7% from 2006, while this year's first quarter saw a 9% decline from the year-ago period. Veteran insurance analyst Elizabeth Malone of KeyBanc Capital Markets still likes Markel and has a Buy on the stock, with a 12-month target price of $485.
Historically, Markel has traded at 1.3 times to 2.5 times its estimated year-ahead book value. Malone arrives at 485 by assuming that Markel will move up from a current price of 1.5 times to 1.7 times her estimate of year-end 2008 book value of $287.37 a share, and to 15.5 times her 2008 earnings per share estimate of $31.39.
Markel believes the recent downturn in pricing may be far shorter-lived than the multiyear premium drop in the 1990s. If insurance industry pricing improves, Barron's said that shares of Markel could jump over 20%.
Sign up at EasyStockAlerts.com To Be Alerted To Your Stock News Today!
You May Also Be Interested In
- Trump: Reinstating The Iranian Blockade
- Waller: Recent Increases In Core Inflation Are Quite Broad
- Trump To Discuss Foreign Interference In 2020 Election - MS Now
Create E-mail Alert Related Categories
Insiders' Blog, Trader TalkRelated Entities
KeyBancSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
