Year-to-date the Suncorp Group Ltd (ASX: SUN) share price has been the one of better performers in the insurance industry with a gain of 5%.
By comparison, the QBE Insurance Group Ltd (ASX: QBE) share price has fallen a disappointing 11%.
Where next for the Suncorp share price?
Although it has outperformed its peers this year I still believe that Suncorp is great value for patient buy and hold investors and has the potential to climb meaningfully higher over the next 12 months. Especially if the business continues to perform as well as it has been.
I felt its recent first-quarter update was very positive and demonstrated that its new operating model is working well and delivering on its promises.
Arguably the highlight of the update was its 2.4% increase in gross loans from its banking business during the quarter. The catalyst for this growth was strong home lending supported by improved capability, simplified processes, and improved retention.
Impressively, this was achieved while maintaining its commitment to responsible and sustainable lending practices.
If the company can continue to perform as strongly as this in the following quarters, I expect its share price will further appreciate in value.
I'm not alone in thinking this. Following its quarterly update UBS put out a note which revealed that its analysts have retained their buy rating and $14.80 price target.
This price target implies potential upside of 4.5% over the next 12 months based on its last close price. When you factor in its trailing fully franked dividend this potential return increases to over 9.6%. I feel this offers a compelling risk/reward for investors, potentially making Suncorp a quality addition to most portfolios.
