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Valued at a market cap of $34.3 billion, The Hartford Financial Services Group, Inc. (HIG) provides insurance and financial services to individuals and businesses. The Hartford, Connecticut-based firm offers various investment products, group life & group disability insurance, property & casualty insurance, and mutual funds.
The financial sector giant has significantly outpaced the broader market over the past 52 weeks. HIG has rallied nearly 54.9% over this time frame, while the broader S&P 500 Index ($SPX) has gained 30.1%. Moreover, on a YTD basis, shares of HIG have surged 47.1%, compared to SPX’s returns of 24.1%.
Zooming in further, HIG’s outperformance looks apparent when compared to the Financial Select Sector SPDR Fund’s (XLF) 40.9% gain over the past 52 weeks and 31.8% return on a YTD basis.
Shares of HIG plunged 6.8% after its Q3 earnings release on Oct. 24. The company’s net income surged 18% year-over-year to $761 million, while its revenues jumped 9.5% year-over-year to $6.8 billion. Its results benefited from the robust growth in commercial lines and personal lines premium, lower net realized losses, and higher net investment income.
However, HIG’s $32 million increase in general liability reserves due to the higher frequency of large losses and increased attorney representation coupled with adverse development in commercial auto liability might have dampened investor confidence and led to its downward price movement.
Nonetheless, for the current fiscal year, ending in December, analysts expect HIG’s adjusted EPS to increase 13.5% year over year to $10.08. The company’s earnings surprise history is mixed. It beat the analysts’ earnings estimates in three of the past four quarters while missing on another occasion. Its adjusted EPS of $2.53 for the last reported quarter surpassed analysts’ bottom-line estimates by a notable 1.6%.
Among the 22 analysts covering the stock, the consensus rating is a “Moderate Buy,” which is based on seven “Strong Buy,” two “Moderate Buy,” 12 “Hold,” and one "Strong Sell” rating.
The configuration is slightly less bullish than three months ago, with eight analysts suggesting a “Strong Buy.”
On Oct. 25, Roth MKM maintained a “Neutral” rating on HIG and raised the price target to $120, which indicates a modest 1.5% upside from the current levels.
While the mean price target of $125.15 represents a modest upside of 5.9% from current price levels, the Street-high price target of $144 suggests a massive potential upside of 21.8%.
