Travelers' 30% Rally Triggers Wave of Wall Street Downgrades

Analyst

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Summary · why it matters

Travelers Companies shares have surged more than 30% this year, hitting a record high and prompting at least six analysts to downgrade the stock this month. Goldman Sachs analyst Robert Cox lowered the rating to sell, while BMO Capital Markets analyst Mike Zaremski cut to market perform from outperform, and Morgan Stanley analyst Bob Jian Huang reduced to underweight from equal-weight in mid-July. The downgrades come despite stronger-than-expected second-quarter results, with analysts citing a stretched valuation at roughly 12 times forward earnings and about 2.7 times tangible book value, above the 10-year average of around 2 times. Bloomberg Intelligence analyst Matthew Palazola noted that insurance price increases are falling below claims cost growth, potentially limiting further upside for large commercial and multi-line property and casualty insurers like Travelers and Chubb.