Keefe Bruyette & Woods analyst Meyer Shields downgraded National General Holdings Corp. to "market perform" from "outperform" mostly on the stock's limited upside.
He noted that the company's stock surged 40.8% year-to-date compared with the S&P 500's 2.3% rise. The stock is also trading at 11.0x Shields' 2019 EPS, putting it just 4.6% below his price target of $29.
Shields expressed concern over near-term personal auto insurance pricing and medium-term personal auto profitability for the company. He anticipates auto rate increases to continue weakening amid better underwriting performance that is shifting insurers' attention back to growth.
Shields maintained his EPS projections at $2.30 for 2018 and $2.70 for 2019. He introduced his initial 2020 EPS projection of $2.95, assuming solid organic premium growth, stable combined ratios and rising investment yields.
