FBR Capital Markets is lowering its price target for Argo Group International Holdings, Ltd. (AGII) after the company reported disappointing third quarter. The target has been cut to $44 from $48.
FBR said that a low return on equity remains Argo's main problem, and low interest rates and high levels of industry competition doesn't make improvement likely.
On Monday, the company reported operating EPS of $0.82, missing the $1.04 that analysts were predicting.
"With these returns, it is difficult to justify valuation close to book value." FBR said in a note to clients. "We would feel much more aggressive in pitching AGII shares if management could present a comprehensive plan to improve ROE."
The analyst kept the rating on AGII at Outperform.
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