Merrill Lynch has downgraded Chubb Corp. to Sell from Hold but raised the stock’s price target to $138 (8.1% downside potential) from $132. Shares of the insurance company closed 1% lower on Tuesday.
Merrill Lynch analyst Joshua Shanker said that despite price increases, Chubb is likely to lag peers in terms of margins and earnings growth.
Last month, Chubb (CB) announced a new share buyback program of up to $1.5 billion through Dec. 31, 2021. The company said that the existing share repurchase authorization, which will remain effective through Dec. 31, 2020, would be used before the company starts its new share repurchase program.
In addition to the share buyback, the company declared a quarterly dividend of $0.78 per share, which will be paid on Jan. 8, 2021 to shareholders of record as of Dec. 18, 2020. Chubb’s annual dividend of $3.12 per share now reflects a dividend yield of 2.1%.
On Oct. 27, Chubb posted mixed 3Q results. The company’s earnings of $2 per share were below the Street’s estimates of $2.23 per share. Meanwhile, its 3Q revenue of $8.77 billion, beat the consensus estimates of $8.27 billion. (See CB stock analysis on TipRanks)
Overall, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 10 Buys, 2 Holds and 1 Sell. The average price target stands at $159.38 and implies upside potential of about 6.1% to current levels. Shares have slipped 3.5% year-to-date.
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