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(Sharecast News) - RBC Capital Markets cut its price target on Beazley on Thursday to 1,000p from 1,125p on lower forecasts, following the company's first-half results a day earlier.
"The impact of 2% more caution on the combined ratio and 2% lower annual top-line growth gives low teen underlying cuts to outyear earnings, reflecting the high operational gearing as competition increases and margins normalise," RBC said.
"M&A could underpin organic growth that is becoming harder to achieve, potentially at a marginal cost to tangible NAV.
"Strong starting solvency underpins an unchanged view of $500m annual buybacks for total capital return of 11% on a 12-month view, which should provide good support to the shares."
The bank said its price target was being reduced with lower forecasts, equating to 1.65x book for 17.5% average adjusted return on equity.
On Wednesday, Beazley posted a drop in first-half profit and cut its full-year premium growth guidance to low to mid-single digit, from mid-single digits in April.
RBC Capital maintained its 'outperform' rating on the stock.
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