Generali rewarded after a better-than-expected quarterly report

(Il Sole 24 Ore Radiocor) - Generali was rewarded after the release of the group's quarterly report and the confirmation of its targets: the share closed the session up 2.69% at 38.58 euro, taking it to levels not far from the top in the 39.5 euro area touched on 11 May.

The market promoted the insurance company as the numbers for the quarter beat expectations, especially regarding the operating result. In addition, they appreciated that CFO Cristiano Borean confirmedthe targets of the business plan to 2027 "even in the most extreme scenarios". A plan that, moreover, envisages earnings per share to rise by an average of 10% per annum. The Cfo also announced that an investor day will be held on 18 November in London, at which the 'state of progress of the strategic plan' will be reviewed, specifying, however, that 'there will not be an update of the plan targets'. The indication is important, bearing in mind that there was a fear among the operating rooms of a cautious message on the achievement of the targets in the plan, in the light of the unstable geopolitical framework.

In detail, in the January-March period, the Leone di Trieste group posted a normalised net profit of €1.3 billion (+5.2% or +9.3% excluding a one-off tax component linked to the French tax on large companies) with a normalised eps of €0.84 (+6.0% or +10.2% excluding the same tax component). The item beat the consensus, which was around EUR 1.24bn. Net profit declined by 2% to EUR 1.17bn, reflecting not only the aforementioned effects, but also the performance of the financial markets in the first quarter. The latter also affected the Solvency Ratio, which fell slightly to 212% from 219% at the end of the year. In the first three months of the year, gross premiums rose to EUR 28.2bn (+6.8%), driven by increases in both life (+7.5%) and non-life business (+5.8%). The operating result grew to EUR 2.2bn (+8.1%), of which EUR 1,090m (+9.9%) came from Life, EUR 1,041m from Non-Life and EUR 314m (+15.5%) from Asset & Wealth Management. The figure beat analysts' average expectations of around EUR 2 billion.

Investors, on the other hand, appreciate the fact that the core insurance business remains very strong and cash generation continues to be high. Numerous analysts, however, remain cautious on Generali, believing that it is already fairly valued. After all, they are up around 8% since the beginning of the year.

Equita, for instance, recommended a 'Hold' on the shares, calculating a price target at EUR 36. Banca Akros, too, reiterated its 'Neutral' rating, despite estimating a price target of EUR 40 and pointing out that the operating result for the quarter was above expectations. Barclays is more critical, despite commenting that in the quarterly report 'all key indicators were above (not particularly high) expectations'. The British bank's experts took into account 'a small positive reaction to the results', as is in fact happening, but also stressed that they considered it 'difficult to expect significant revisions to the consensus in subsequent years'. Thus they continue to be negative on Generali's shares, for which they indicate a price target much lower than current prices and equal to 28.5 euro.