Intact Financial Corp

Intact Financial Corp (TSX: IFC) is a property and casualty insurance company that provides written premiums in Canada. The company distributes insurance under the Intact Insurance brand through a network of brokers and a wholly owned subsidiary, BrokerLink, and directly to consumers through Belairdirect.

Why should Investor’s book profit?

• Increasing Uncertainties: Global property and casualty insurance businesses are witnessing greater uncertainties on the back of the resurgence in the COVID-19 cases. As resurgence in COVID-19 cases COVID-19 is impacting property and casualty insurance companies and is expected to continue to affect claims and premium trends over the next several months.
• Overvalued: From the TTM P/E standpoint, IFC shares are trading at a premium valuation compared to its peers. TTM P/E multiple of IFC stood at 18.47x, whereas peer’s median TTM P/E ratio stood at 10.64x, implies a premium of ~33.6% against the peer’s median.
• Technical weakness: On daily price chart a bearish crossover is forming where short-term 50-day SMA moving below the crucial 200-day SMA, which is typically considered as bearish indicator.  Also, the leading momentum indicator 14-day RSI is hovering in a neutral zone with bearish bias at 40.16.

Stock recommendation

The resurgence in the COVID-19 cases across the world has once again creating a lot of uncertainties for a property and casualty insurance companies. Moreover, IFC share are relatively overvalued from the TTM P/E standpoint when compared to its peers. And bearish crossover on the daily price chart indicating a potential downside from the current trading level. Hence, we recommend a “Sell” rating on IFC stock at CAD 162.21 at 9:47 AM as per Toronto time on 09 Dec 2021.

1-Year price chart (as on December 09, 2021, during the market hours). Source: REFINITIV, Analysis by Kalkine Group

*The reference data in this report has been partly sourced from REFINITIV.

Disclaimer

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