What Happened to QBE Share Price?
Shares of QBE Insurance Group Ltd [ASX:QBE] gained 3.21% today. Shares went from trading at $9.82 yesterday, up to $10.135 at time of writing.
Why is QBE Share Price Up?
QBE shares have lost around 24% since last June due to losses from Cyclone Debbie in Australia, hurricanes Harvey, Irma and Maria in North America and the Mexican earthquake.
Shares plummeted yesterday, after the company announced that their pre-tax earnings would be taking a US$600 million hit this year.
With such high expected loses, it is unlikely that QBE will be paying any dividend and it may even have to stop its share buyback.
Yet, Morgan Stanley has declared the stock a ‘buy’. As Morgan Stanley analysts wrote, courtesy of the Sydney Morning Herald:
‘With greater clarity of FY17e earnings, and the market not pricing in FY18e upside from premium hikes, in our view now is the time to buy…
‘With around $US25 billion of investments, QBE’s yield on technical reserves and shareholder funds stands to benefit from rising yields.’
What now for QBE?
Morgan Stanley analysts have upgraded the stock to ‘overweight’ and have reduced the share target price to $12.90, from the previous $13. Investors need to decide if QBE will benefit from rising yields, or if it will struggle with this year´s losses.
If you would like to find out more about the three best investments this year in the ASX, click here.
For Money Morning