Broker tips: Beazley, Moneysupermarket

(Sharecast News) - Analysts at RBC Capital Markets have updated their model on insurance firm Beazley ahead of the group's third-quarter trading update, raising its target price on the stock from 650.0p to 675.0p in the process. RBC Capital Markets lowered its full-year earnings estimates for Beazley by 40%, primarily assuming further investment MTM losses of $120.0m. However, for outer years, it increased its estimates by around 3% - assuming a modest pick-up in running yields and saying it sees an upside to its estimates here.

"We assume a $100.0m impact from Hurricane Ian, equivalent to just under a 20 basis point loss share on a $55.0bn industry total. We expect BEZ to meet its high-80s FY guidance, having upgraded it at the 1H, helped by the continued outperformance in Cyber," said RBC.

The Canadian bank added that Beazley remains its "top pick" in the specialty (re)insurance space, where it sees the highest cross-cycle book value compounding potential.

Analysts at Berenberg lowered their target price on price comparison website operator Moneysupermarket.com from 275.0p to 240.0p on Wednesday, citing risks from Amazon's newly announced home insurance comparison site.

Berenberg stated that after once again beating expectations with its Q3 results, Moneysupermarket increased full-year 2022 underlying earnings guidance by 15% over the past three months.

However, the analysts pointed out that despite this, the stock remains near its lows for the year and trades at a near-decade low of 13.0x price-to-earnings, a 9.0% free cash flow yield, and a 6.8% dividend yield for 2022.

Berenberg said much of this stems from concern linked to Amazon, which launched with a narrow proposition of only three mid-sized providers, compared to over 60 providers offered by Moneysupremarket, making it "an uncompetitive proposition" at present.

"All in, we do not believe Amazon will have a material short-term impact on the outlook for insurance switching, while the impact over the medium term depends on how quickly and earnestly Amazon invests in this venture: the most likely outcome is that it adds to an already highly competitive market but is not a category killer given the nature of price comparison in our view," said Berenberg. "We believe the threat posed by Amazon is overstated and continue to believe MONY will prove resilient in the tough macro environment."