UPDATE: Morgan Stanley Reiterates Overweight Rating, Raises PT on ACE Limited on Multiple Positive Factors

In a report published Thursday, Morgan Stanley analyst Kai Pan reiterated an Overweight rating on

, and raised the price target from $119.00 to $121.00. In the report, Morgan Stanley noted, “ACE's strong balance sheet (we estimate ~$8.5b excess capital or 29% of equity) and global footprint drive higher returns via organic growth, M&A, and increasing dividends & buybacks. Our 2014‐15e EPS is ~9‐11% ahead of consensus. Valuation is attractive at 1.2x Book and our $121 target price (1.3x 1Q15e Book) offers 18% upside plus a 2.5% div yield. ACE Op EPS of $2.27 was above $2.15 consensus and our $2.24 estimate. Lower cat losses ($53m vs. $80 MS est.) and higher investment income $553m vs. $544m MS est.) drove the 3c EPS upside vs. our est. P&C underwriting was solid with the 88.8% combined ratio including $53m/1.5pts cats, $62m/1.6pts reserve releases, and +50bps core margin improvement YoY. Crop insurance results were negatively impacted by $38m additional losses, for 2013. P&C premiums grew +12% YoY. Investment income increased +4%. Book Value rose +2.4% to $86.90 (+6% YoY) and the Op ROE was 10.7%.” ACE Limited closed on Wednesday at $102.32.