Shares in banking giant Suncorp Group Ltd (ASX: SUN) are rangebound today after stumbling lower from the open. At the time of writing, the Suncorp share price is edging less than 1% higher at $12.09.
Following the bank's earnings update yesterday, analysts have chimed in with their outlook on the stock and most of the sentiment appears to be positive. Let's take a closer look.
What are analysts saying about the Suncorp share price?
The team at Jarden were first to chime in with their analysis, noting that Suncorp's 1H FY22 cash profit was a positive surprise and was 26% ahead of consensus estimates.
The results were underpinned by lower catastrophe costs and a larger than expected one-off net Covid claim benefit.
Not only that, but gross written premium (GWP) was almost 7% and well ahead of Jarden's internal forecasts, leaving the broker bullish and holding its price target of $12.40.
Macquarie also chimed in and noted that Suncorp's results were filled with pockets of goodness, especially the lower hazards costs and better than expected GWP.
It was also happy with the bank's dividend payout ratio, which rests near the top end versus the other banking majors.
However, the broker also pointed out Suncorp's net interest margin (NIM) contracted by around 197 basis points throughout the half. But this was expected and in line with expectations for the banking sector.
It retained an overweight rating today and values its fellow ASX banking fellow at $14.40 per share.
Meanwhile, analysts at Morgan Stanley reckon Suncorp has handled recent challenges thrown its way better than expected.
The investment bank notes that "Suncorp delivered stronger margins and top-line growth in the insurer, and investment yields are rising, making the path to more than 10% margins more visible".
It isn't as rosy as its broker peers, however, noting that Suncorp still has a number of headwinds on the horizon. These are namely catastrophe costs and other earnings pressures – especially with the bank's NIM compression.
It remains equal weight on the stock even after raising its price target by 3% to $12.25 per share. Each of Morgans, UBS and Citi also raised their valuations on Suncorp as well to $13.19, $14 and $13.60 per share respectively.
Suncorp share price summary
In the last 12 months, the Suncorp share price has climbed 13% and is up 9% for the year to date.
Over the previous month, it has climbed 4% into the green and investors are showing support these last few days as shares have jumped another 8%.
