Since early August, QBE Insurance (ASX: QBE) shares have fallen more than 16%.
For context, S&P/ASX 200 Financials (ASX:XFJ) index lost about 5% in the same period.
Earlier this month, Macquarie placed an outperform rating on QBE shares with a price target indicating roughly 15% upside.
However the team at Bell Potter is a little less optimistic.
Bell Potter released updated analysis on QBE shares last Thursday.
The broker has a hold recommendation on QBE shares.
Here’s what the broker had to say.
Concerns over slowing rate increases
In last week’s report, Bell Potter said it sees the investment thesis on QBE as generally good, but with some concerns over slowing rate increases and potential rising inflation.
The broker said premium rates have been improving, ahead of inflation, showing that insurers retain pricing power, although rate increases are now slowing.
Profitability is seeing a strong underwriting profit, and investment returns are reasonable and stable (running yield) meaning the business is making a return on equity of 17.5% in FY25e.
The valuation is full, and in our opinion, and anticipates a lengthy continuation of a positive upcycle.
Hold recommendation from Bell Potter
The broker said at the half year results, it felt the company could be seen to be growing into a softening environment.
With a PCA capital ratio of 1.81 (after interim dividend), the company’s capital is at the top of its target range (1.6-1.8x). This capital is being valued by the equity market at a premium to book value and the company is looking for ways to utilise its capital and grow into attractive areas.
The broker said it will review its forecasts post the Q3 update, noting the upside with the shares below $20.
However for now, Bell Potter has maintained its target price of $21.20 and retained its hold recommendation.
QBE shares closed last week at $19.64.
Based on this price target it appears QBE shares are hovering close to fair value, with an indicated upside of approximately 8%.
The post What’s the upside for QBE shares after a rocky 2 months? appeared first on The Motley Fool Australia.
Should you invest $1,000 in QBE Insurance right now?
Before you buy QBE Insurance shares, consider this:
Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and QBE Insurance wasn’t one of them.
The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
And right now, Scott thinks there are 5 stocks that may be better buys…
* Returns as of 18 November 2025
.custom-cta-button p {
margin-bottom: 0 !important;
}
More reading
- 5 things to watch on the ASX 200 on Friday
- What does Macquarie think QBE shares are worth?
- A 16% upside plus dividends! Macquarie upgrades QBE shares to outperform
- Are QBE or IAG shares a buy according to Macquarie?
- QBE Insurance Group launches US$300m subordinated notes issue
Motley Fool contributor Aaron Bell has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
Leave a Reply