Deutsche Bank Initiates Coverage With A Buy Rating And $35 PT On AXIS Capital (AXS)
August 24, 2010 5:50 PM
Analysts at Deutsche Bank rate shares of Axis Capital (NYSE: AXS) a “buy”, despite the belief that earnings seem poised to deteriorate among a softer underwriting cycle concurrent with lower investment yields. Analysts have also set a price target of $35.00 on the stock.
Deutsche Bank writes, “While 0.9x book appears on the surface as a punitive valuation, it actually represents a premium valuation when compared with peers, as concerns over industry rate adequacy and Bermuda's tax relationship with the U.S. persist. A larger-than-peer-average balance sheet and willingness to deploy it opportunistically justify a premium valuation, in our view.”
Analysts are more bullish on reinsurers through the rest of the year due to the seasonal property-catastrophe reinsurance trade. Deutsche Bank also believes that AXS represents a valuable portfolio diversifier for investors looking for defensive financials.
Deutsch Bank mentions, “The company may have lost some of its luster when it modestly shifted away from its core short-tailed focus, but we believe that this may reverse when the market hardens. Finally, we believe that aggressive share buybacks provide a floor for the stock.”
Shares of AXS closed today trading at $31.08.
