Summary

  • Broker BMO upgraded Hanover Insurance Group from ‘market perform’ to ‘outperform’ on August 31, 2023.
  • Hanover reported a net loss of US$69.2 million in Q2 2023, compared to Q2 2022’s net income of US$ 22.7 million.
  • BMO stated that the company’s top-line growth is not expected to reduce, given the inflationary pressures prevailing in the auto and home marketplace.

Hanover Insurance Group (NYSE: THG) received a rating upgrade from brokerage BMO, leading to a 1.4% increase in its share price on August 31, 2023. BMO Capital Markets upgraded THG from ‘market perform’ to ‘outperform’, while raising its price target on the stock.

As per EODHD/Others, THG has an overall mean rating of 2.4 on a scale of one to five. Here, one signifies ‘strong buy’ and five represents ‘strong sell’. Meanwhile, the stock has a consensus mean price target of US$134.17, which is 25.72% higher than its closing price on Thursday.

After the rating upgrade from BMO, the company’s share price rose to US$107.47 on August 31, 2023. At the same time, BMO also upped its price target on THG to US$126, representing an upside potential of 18.07% over THG’s closing price on Thursday.

THG Price Chart; Image Source: THG EODHD/Others

The stock closed at US$106.72 on August 31, 2023. THG hit its 52-week high of US$148.78 earlier this year on February 8, 2023.

Hanover Insurance reports increased revenue in Q2 2023

For the second quarter of 2023, Hanover Insurance Group reported a total revenue of US$1.5 billion as compared to US$1.29 billion in Q2 2022.

However, the company’ net loss was US$69.2 million in Q2 2023, in contrast to Q2 2022’s net income of US$ 22.7 million. Its operating income was negative US$79.4 million in Q2 2023, and net investment income was US$87.6 million, an increase of 24.3% over the previous corresponding period.

The company also reported a fall in its book value per share to US$62.62 as on June 30, 2023, as compared to March 31, 2023.

Based on Thursday’s closing price of US$106.72, the stock has a dividend yield of 3.04%.

BMO believes top-line growth unlikely to slow down

Broker BMO stated that after a string of disappointing quarterly results from the company, “too much” bad news is priced into its valuation.

The brokerage also believes that Hanover is expected to follow suit like its peers that have experienced poor weather results in the past. This includes increasing deductibles and offering additional “depreciated value” roof-replacement coverage.

Broker BMO added that the company’s top-line growth is less likely to reduce, given the presence of inflationary pressures in the auto and home marketplace.

Image Source: ©2023 Krish Capital Pty Ltd.; Data Source: EODHD/Others

As per EODHD/Others, most analysts covering THG believe the stock is a ‘hold’,. As per EODHD/Others, one analyst has given THG a ‘strong buy’ rating, two analysts have given it a ‘buy’ rating and four believe THG is a ‘hold’.

Among other brokers, JMP Securities gave the stock a ‘market outperform’ rating and Piper Sandler gave it an ‘overweight’ rating.