Shares in Suncorp Group Ltd (ASX: SUN) are edging lower on Thursday to now trade at $11.18 apiece in afternoon trade.
ASX financials have strengthened in 2022 and Suncorp is no exception. It has risen around 1% in that time, having surfed its way through a wavy run.
Still, Suncorp is lagging the broader sector, with the S&P/ASX 200 Financials index (XFJ) spiking harder than both names this year to date.
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What are brokers saying about Suncorp?
Analysts at JP Morgan are neutral on the stock and have valued Suncorp at $13.30 per share in a note last week.
The firm refers to a recent update from Suncorp, advising its assessment of the East Cost floods that occurred in the rollover from February to March.
"Whilst [Suncorp] say perils and reinsurance allowances may increase for FY23, they [Suncorp] say there is upside expected on interest rates vs original expectations that offsets this," the broker said.
"Uncertainty remains still on scope creep from the government's cyclone pool that could affect how flood risks are dealt with in the future".
Even though the broker says Suncorp appears to be in a "consolidation phase", where margins are likely to benefit in FY22, it is still cautious due to headwinds in the bank's personal lines business.
"We note, however, that the Australian personal lines business still faces challenges around achieving unit and price growth," its analysts remarked.
"We think the bank is also operating in a challenging and competitive environment that will place pressure on its NIM [net interest margin] over the short and medium term", it added.
"We are still of the view that SUN's medium-term insurance margin and bank cost-to-income targets remain ambitious".
Meanwhile, analysts at Citi reckon that Suncorp's underlying business should improve, especially if interest rates rise to offset insurance-related costs.
Even though it trimmed FY22 EPS forecasts by roughly 2% in a recent note, it still remained firm on FY23 projections and retained its buy rating with a $13.60 price target.
Macquarie values the bank at $15 per share, whereas Morgan Stanley agreed with Citi, in that it likes the bank's underlying business growth.
It too values Suncorp at $13.14 per share, slightly off the consensus of $13.32 according to Bloomberg data.
Will the price performance change? Well, according to these brokers, it could do. But 25% of analysts covering the stock still have it as a hold right now, whilst 75% remain bullish, according to Bloomberg.
In the last 12 months, Suncorp shares have walked 12% higher and are now 1% in the green this year to date. Over the past month, however, shares have slipped and are now 4% in the red.
