Sandler O'Neill analyst Paul Newsome upgraded Navigators Group Inc. to "buy" from "hold," writing that the company's valuation has become attractive as shares trade below peers.
He wrote that Navigators' model of diverse business lines makes the company less sensitive to poor trends in general liability insurance than investors might think.
"Navigators is really a collection of a lot of independent specialty businesses — and not all of its business will experience a worse environment in 2018 versus 2017," Newsome said.
The company has a favorable investment and capital position and is a strong candidate for acquisition given that it possesses "a number of attractive businesses" for potential buyers, he wrote.
Newsome maintained his $57 price target. He also maintained his full-year EPS estimates at $1.02 and $2.70 for 2017 and 2018, respectively. He introduced a 2019 EPS estimate of $2.75.