Market Overview

Barclays Thinks All The Goodness Of Arch Capital's New Acquisition Already Baked Into Price

Share:
Barclays Thinks All The Goodness Of Arch Capital's New Acquisition Already Baked Into Price
Related ACGL
Credit Suisse Adjusts Its Top Picks List In A Record-Breaking Market
AIG Prices Sale of 6.4 M Arch Capital Shares Through IPO

Barclays’ Jay Gelb believes the good news associated with the expected accretion from the United Guaranty acquisition is already priced into Arch Capital Group Ltd. (NASDAQ: ACGL)'s share price.

Gelb downgraded the rating on the company from Overweight to Equal Weight, with a price target of $85.

“We still view Arch as among the best managed insurers with among the best track records of sustained book value per share growth,” the analyst mentioned.

Accretion

The recently announced United Guarantee acquisition is expected to drive significant EPS and ROE accretion for Arch Capital Group.

Although Arch Capital Group negotiated an attractive deal, Gelb pointed out that the good news was already baked into the share price.

Related Link: Goldman Sachs Upgrades Arch Capital, Lifts Price Target To $79

Share Price Not Justified

In addition, the analyst pointed out that almost “half of Arch's pro forma earnings are expected to be from mortgage insurance with the remainder from P&C re/insurance. The market now appears to be valuing Arch as a top-tier P&C insurer while still giving it all the credit for EPS accretion.”

Gelb views this as difficult to justify.

At time of writing, Arch Capital was down 0.83 percent at $79.98.

Full ratings data available on Benzinga Pro.

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email feedback@benzinga.com with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!

Latest Ratings for ACGL

DateFirmActionFromTo
Oct 2017UBSMaintainsBuy
Oct 2017BarclaysMaintainsEqual-Weight
Sep 2017UBSMaintainsBuy

View More Analyst Ratings for ACGL
View the Latest Analyst Ratings

Posted-In: Barclays Jay Gelb United GuarantyAnalyst Color News Downgrades Analyst Ratings Movers

 

Related Articles (ACGL)

View Comments and Join the Discussion!