What Happened?
Shares of auto insurance provider Mercury General (NYSE: MCY) jumped 3.4% in the afternoon session after Raymond James reaffirmed its "Strong Buy" rating and increased its price target on the stock. The financial services firm boosted the price target by 11.11% from $90.00 to a new target of $100.00. This adjustment reflected continued confidence in the company's financial performance and growth outlook. The positive sentiment was also reflected in the market, as the stock reached a new all-time high, underscoring solid investor confidence.
The shares closed the day at $82.08, up 3.3% from previous close.
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What Is The Market Telling Us
Mercury General’s shares are somewhat volatile and have had 13 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was about 2 months ago when the stock gained 3.1% on the news that the company reported stellar second-quarter results that blew past Wall Street estimates.
The property and casualty insurer posted earnings per share of $2.67, starkly contrasting with the consensus forecast which had anticipated a loss of $0.10 per share. Revenue for the quarter also came in ahead of expectations. A significant factor behind the surge in profitability was a massive drop in catastrophe losses, which plummeted to just $13 million compared to $125 million in the same period last year. The strong performance was further supported by a 10.6% increase in net premiums earned and an improved combined ratio, a key measure of underwriting profitability for insurers.
Mercury General is up 24.6% since the beginning of the year, and at $81.90 per share, has set a new 52-week high. Investors who bought $1,000 worth of Mercury General’s shares 5 years ago would now be looking at an investment worth $1,929.
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