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Valued at a market cap of around $16.7 billion, Bermuda-based Everest Group, Ltd. (EG) is a global powerhouse in property, casualty, and specialty reinsurance and insurance, delivering tailored solutions to tackle customers' most critical challenges. With a proud 50-year legacy of disciplined underwriting and robust capital and risk management, Everest stands as a trusted leader in the industry.
However, shares of this financial company have plunged 6.2% over the past year, lagging behind the broader S&P 500 Index’s ($SPX) healthy 31.8% annual return during the same time frame. Plus, in 2024, the stock is up just 10% compared to the SPX’s 25.8% return on a YTD basis.
Zooming in further, EG’s underperformance becomes even more evident when compared to the iShares U.S. Financials ETF’s (IYF) impressive surge of almost 50% over the past 52 weeks and 39.3% return on a YTD basis.
Everest Group's Q3 earnings report on Oct. 30 painted a mixed picture, triggering a sharp 6.4% drop in its share price during the following trading session. The company showcased solid revenue growth, with sales rising 13% year-over-year to $4.3 billion, though missing Wall Street’s $4.5 billion forecast. On the brighter side, EPS climbed 3.3% annually to $14.62, outpacing estimates by an impressive 22.6% margin.
However, escalating expenses took a toll on profitability, causing net income to tumble 24% year over year to $509 million and squeezing the profit margin to 12%, down from 17% in the same period last year. While the results highlighted Everest’s revenue momentum, cost pressures weighed heavily on investor sentiment.
For the current fiscal year, ending in December, analysts expect EG’s EPS to decline 12.7% year over year to $57.95. The company’s earnings surprise history is mixed. It surpassed the consensus estimates in three of the last four quarters while missing on one other occasion.
Among the 14 analysts covering the stock, the consensus view is a “Moderate Buy,” which is based on five “Strong Buy,” one “Moderate Buy,” seven “Hold,” and one “Strong Sell” ratings. However, the mood on Wall Street looks slightly less bullish than it was a month ago when six analysts advocated a “Strong Buy.”
On Nov 18, TD Cowen slashed Everest Group’s price target to $419 from $444 and maintained a “Hold” rating on the stock. This newly issued price target suggests a potential upside of 7.7% from current levels.
The average analyst price target of $425.92 indicates only 9.5% potential upside from the current price levels. However, the Street-high price target of $517 suggests that EG could rally as much as 32.9% from here.
