Key points
- After a period of gut-wrenching volatility, the QBE share price is up by almost 6% over the past month
- Citi forecasts strong revenue growth for the insurer's full-year results to be announced on 18 February
- This result could lead to a further share price "advance" for QBE investors, Citi says
Shares in QBE Insurance Group Ltd (ASX: QBE) are down 0.33% today to $12.04. However, the QBE share price has had a great month of trading and is up 5.99%.
After a 3-month period of gut-wrenching volatility, during which time QBE shares closed as high as $12.41 and as low as $11.29, the stock appears to be regaining strength.
With the onboarding of new CEO Andrew Horton in September 2021, the team at investment bank Citi is feeling positive. Citi is eagerly awaiting the insurer's next earnings announcement for the full year ending 31 December. This is currently scheduled for 18 February.
Let's take a look.
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Why is Citi bullish on QBE?
After a robust outperformance in 2021, when the QBE share price climbed 33%, momentum slowed in December.
However, it has regained steam in the new year and is inching closer to its 52-week high of $12.72.
Citi notes the price change is likely underpinned by QBE's fundamentals, which are backed by the current macroeconomic climate.
The broker reckons that QBE's new chief will keep it simple for his first results announcement. They expect Horton to focus on key numbers like revenue growth and the group's combined operating ratio.
In its own modelling, Citi forecasts strong revenue growth flowing through to lift the pressure off margins down the P&L.
Citi says: "Overall we are optimistic a strong FY result should lead to further share price advance".
Citi is joined by Macquarie and Morgans, who are each bullish on the QBE share price. Both rate it as a buy.
Macquarie, for instance, recently upgraded QBE to outperform on a $13.90 valuation. It estimates a 92% operating ratio in the insurer's upcoming results.
Morgans also sees a period of revenue growth that is expected to impact positively on margins.
The broker also notes that QBE has grown its top line at around 9% in recent times. It likes QBE's valuation and has a price target of $13.70.
QBE share price sentiment
In a list provided by Bloomberg Intelligence, 92% of analysts covering QBE say buy. Only 1 says hold.
The consensus price target on QBE is $14.70, which indicates a 22% margin of safety.
Credit Suisse is most bullish and values QBE at $16.60 per share.
