The QBE Insurance Group Ltd (ASX: QBE) share price was out of form on Friday.
The insurance giant's shares dropped almost 4% to end the week at $14.61.
Investors were selling down the QBE share price after the company's first-quarter trading update revealed a couple of items that overshadowed an otherwise strong start to the year.
In light of this, investors may be wondering if a buying opportunity has opened up. Let's find out.
Should you buy the QBE share price dip?
The team at Morgans remains positive on QBE following its update.
And while the broker described the quarter as a "blip", its analysts "still see the fundamental story of QBE's earnings improving strongly over the next few years as intact."
According to the note, the broker has retained its add rating with a trimmed price target of $16.50.
Based on the current QBE share price, this suggests potential upside of 13% for investors over the next 12 months.
And of course, QBE is traditionally a big dividend payer. Pleasingly, Morgans doesn't expect this to be any different this year. It is forecasting a 5.8% dividend yield for investors, boosting the total potential return to almost 19%.
What did the broker say?
Morgans remains positive and sees plenty of value in the QBE share price despite the mixed quarter. It explained:
QBE has given a 1Q23 performance update. Overall FY23 GWP growth guidance has been increased to +10% on the pcp (up from mid-to-high single digit growth previously), but disappointingly combined operating ratio guidance has also been lifted to 94.5% (previously 93.5%) due to higher CAT claims and a prior year reserve top up. We downgrade QBE FY23F/FY24F EPS by 3%-5% reflecting higher current year claims forecasts and more conservative outer year earnings estimates. Our PT is set at A$16.50.
Whilst higher claims than expected impacted QBE's 1Q23 performance, we still see the fundamental story of QBE's earnings improving strongly over the next few years as intact. We maintain our ADD recommendation, with the stock trading on an undemanding ~10x FY23F PE multiple.
