Wells downgrades Everest Group on reserve adequacy concerns

Wells Fargo downgraded Everest Group to Equal Weight from Overweight with a price target of $402, down from $484. The company had to strengthen reserves in its casualty book and industry-wide concerns over reserve adequacy in casualty lines are likely to weigh on the stock, the analyst tells investors in a research note. The firm says investor sentiment is unlikely to rebound until there is clarity regarding the extent to which casualty lines will experience adverse development and whether business written in recent years will develop similarly to older accident years. Everest has an inexpensive valuation but the “shares will be stuck,” contends Wells.