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BofA Securities upgraded Chubb (NYSE:CB) to Neutral from Underperform as analyst Joshua Shanker expects modestly higher investment yield on the company’s investments and float and a slightly lower tax rate assumption to drive EPS growth in coming years.
BofA expects Chubb (CB) to exit 2026 with a 4.7% yield, compared with 4.2% in Q1 2024. Tax rate assumption was trimmed to 18.5% from 19%.
“The combination of these two changes in our outlook drive up our forward EPS forecast by 4-5% in the out-years, while the change to 2024 EPS is more modest as we slightly increase our 2Q24 catastrophe loss expectation following the recent Texas storm activity,” Shanker wrote in a note to clients.
In addition, Berkshire Hathaway’s (BRK.B) (BRK.A) recently disclosed 7% stake in Chubb (CB) will likely provide support for the stock. “Given a range reaching as high as $260 over the period where Berkshire accumulated the stake, we would expect there is price support for the stock among value investors who might perceive $260/sh as a new floor as $149/sh in book value per share should only be expected to grow over time,” the analyst said.
Shanker also points out that Chubb’s (CB) low operating leverage, while leading to weaker earnings and book value per share than its peers, helps to insulate the company against volatility, which some investors find attractive.
He lifted his price target on the stock to $266 from $244, citing the 5% increase in 2026 forecast combined with a widening of the 2025 consensus peer P/E multiple widening to 10.8x vs. 10.4x previously.
BofA’s Neutral rating on Chubb (CB) contrasts with the SA Quant rating, the average SA Analyst rating, and the average Wall Street rating, all at Buy.
Chubb (CB) stock slipped 0.3% in early Thursday trading.
