On Monday, BofA Securities adjusted its stance on Mapfre SA (MAP:SM) (OTC: MPFRY), elevating the stock to a Buy rating from the previous Neutral and increasing the price target to €2.70 from €2.20.
The firm anticipates a significant recovery for most of the group's property and casualty (P&C) units starting in 2024. In particular, expectations are set for the Spanish market, where profits are predicted to double within the next two years based on conservative assumptions.
The analyst from BofA Securities highlighted that Mapfre's operations in the United States and Latin America are poised to gain from higher pricing and portfolio restructuring.
These strategic moves are expected to balance out the return to normal levels of the exceptionally high margins seen in Brazil. The firm projects an average annual earnings growth of 10% over the next three years for Mapfre, a forecast that positions them well above the consensus.
Mapfre's current valuation was noted as attractive, with shares trading at 6.5 times the estimated 2025 earnings per share (P/E). Additionally, the stock offers an 8% dividend yield, which is seen as providing some measure of support for investors. Following the revision of earnings estimates to reflect a more optimistic outlook, BofA Securities has raised its price objective, suggesting a total return potential of 32%.
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