Research Alert: CFRA Maintains Strong Buy Opinion On Shares Of Arch Capital Group Ltd.
CFRA, an independent research provider, has providedwith the following research alert. Analysts at CFRA have summarized their opinion as follows:We lower our 12-month targe price to $115 from ($118), valuing ACGL shares at 10.9x our '27 operating EPS estimate of $10.55 (lowered today by $0.40) and at 11.6x our '26 EPS estimate of $9.93 (cut by $0.12), versus the shares' three-year average forward multiple and the peer average of 12x. ACGL posted Q1 operating EPS of $2.50 vs. $1.54 the prior year, beating the $2.46 consensus but missing our $2.62 estimate. However, operating revenues declined 1.3% Y/Y, significantly below our 8%-15% growth forecast, reflecting 4.8% lower earned premiums partly offset by 8% higher investment income. We view ACGL as a top-tier underwriter with superior underwriting capabilities, maintaining strong profitability metrics despite competitive headwinds. We now see revenue growth of 3%-5% in 2026 and 2027. Underlying underwriting results remained superior to industry averages, with the combined ratio at 82.3% vs. 81.0% the prior year, about 5-10 points better than industry, which will support EPS.
