Cincinnati Financial upgraded to Buy from Neutral at Citi

Citi upgraded Cincinnati Financial to Buy from Neutral with a price target of $135, up from $126. The analyst is “incrementally cautious” on workers’ comp and expects medical inflation to begin to more negatively impact margins over the near-to-intermediate term. Workers’ comp has been a consistent source of reserve releases in recent years, and the product line has been overshadowed by social inflation and casualty conversations, the analyst tells investors in a research note. As a result, Citi says the risk/reward in U.S. insurance is “more negatively skewed than we thought.” It ranked commercial lines as its least preferred subsector. However, for Cincinnati Financial, the analyst says share downside is limited by less workers’ comp exposure, higher comp loss picks and material casualty reserving actions already taken.