Everest Re Group, Ltd. (RE) reported 1Q08 results of $3.03 per share, versus $4.13 per share in the year ago quarter. Prior to the conference call, we are lowering our 2008 and 2009 earnings expectations to $12.78 per share and $13.75 per share, respectively from $13 per share and $14 per share. As a result, our six-month price target is now $99.35 per share. Our Hold recommendation on the shares remains in place.
The shares of Everest Re trade at 1.04x its 1Q08 book value of $91.01 per share. RE's valuation has continued to moderate from the 1.5x level exhibited nearly a year-and-a-half ago, as Everest's five-year average ROE remains below the peer group average. Our six-month price target of $99.35 per share, incorporates a blended peer multiple of 1.03x (1.10x previously) to our estimated September 30, 2008 book value of $96.45 per share.
In addition, the quantitative Zacks Rank for Everest Re is currently 3 (no change since our report on November 18, 2007), indicating no clear directional pressure on the shares over the near term, though the short interest ratio moderated to 0.8 days, versus 1.8 days previously.
Read the analyst note on RE.
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