Keefe Bruyette raises Arch Capital stock price target on earnings

Keefe, Bruyette & Woods raised Arch Capital Group's price target to $106, while keeping a Market Perform rating. This adjustment comes after reviewing their third-quarter 2026 earnings report. The new price target represents 10.5 times the firm's 2027 earnings per share estimate. Currently, the stock trades at $107.86, above the new target, with a P/E ratio of 8.83.

Analysts now project earnings per share of $10.40 for 2026, $10.05 for 2027, and $11.20 for 2028, up from previous estimates of $10.00, $9.95, and $11.00 respectively. These projections factor in bigger reserve releases, lower expense ratios, and lower share counts. The revised estimates are tempered by expectations of slower premium growth and higher core loss ratios.

The updated outlook aligns with positive sentiment across Wall Street, as 10 analysts revised their earnings estimates upwards for Arch Capital. Arch Capital reported impressive third-quarter 2026 results, surpassing expectations with $910 million in after-tax operating income, or $2.67 per share, versus the anticipated $2.30 per share.

Revenue also beat forecasts at $5.39 billion, driven by strong underwriting performance and limited catastrophe losses. The company also amended its letter of credit facility with Lloyds Bank Corporate Markets, increasing the maximum incremental commitment from $50 million to $200 million for the 2027 underwriting year.