3 Reasons BofA Upgraded Travelers To Buy

Loading...
Loading...

Bank of America upgraded Travelers Companies Inc TRV to Buy from Neutral, raising the price target from $123 to $127.

According to the report, reasons for this change in outlook include: (1) extending the price objective by one quarter to June 2017, (2) building in the potential mark to market gains for the 2Q2016 based on moves in asset prices quarter to date, (3) taking into account a higher multiple of stock to the year-ahead book value of 1.4x, up from 1.35x.

The analysts believe Travelers is well positioned given the uncertainties and possible negative consequences of the UK decision to leave the EU, because its UK and Europe operations constitute a very small part of the revenue. Though the company's main revenue driver is U.S. operations, it won't be significantly affected by the slowdown in the U.S. economy given the non-discretionary nature of its products.

Moreover, the analysts think the stock buybacks can provide a downside support for the company.

"We expect Travelers to use the bulk of its earnings this and next year to repurchase shares. Should the stock move lower with the market, we would expect Travelers to accelerate its buyback which, at lower prices, would be more accretive to EPS," said BofA.

Loading...
Loading...
date
ticker
name
Price Target
Upside/Downside
Recommendation
Firm
Posted In: Analyst ColorUpgradesPrice TargetAnalyst RatingsBank of America
We simplify the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

Loading...