UPDATE: Keefe, Bruyette & Woods Upgrades EMC Insurance Group to Outperform, Raises PT as Valuation Discount to Peers is Too Much to Ignore

In a report published Friday, Keefe, Bruyette & Woods analyst Neil Cybart upgraded the rating on EMC Insurance Group EMCI from Market Perform to Outperform, and raised the price target from $30.00 to $35.00. In the report, Keefe, Bruyette & Woods noted, “Following EMC Insurance's 4Q13 results, we're raising our target price to $35 and upgrading the shares to Outperform on valuation. With shares down 7% YTD (trading at 83% of current book), we view a valuation closer to its peer group average (95% forward book) is more appropriate for a conservative insurer, with redundant reserves, that is seeing above-average rate increases and continued AY underwriting improvement. With 27% total potential upside to our $35 target price (including the 3% dividend yield), we recommend buying EMCI shares before the valuation gap closes.” EMC Insurance Group closed on Thursday at $28.33.