Blue Chip Stock Deflates on Profit Miss

The insurer cited weak underwriting and a spike in asbestos claims

Deputy Editor
Oct 22, 2019 at 9:20 AM
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Blue chip name Travelers Companies Inc (NYSE:TRV) is trading back near its early April levels this morning following a disappointing third-quarter earnings report. The firm posted adjusted profits of $1.43 per share, coming in lower than analysts' estimated $2.35 per share. The property and casualty insurer blamed an underwriting loss of $149 million, and a spike in asbestos claims -- for which the firm set aside an additional $220 million. 

The stock is trading down 4.5% at $135.50 in response. While it still maintains a year-to-date gain, the security is set to close south of recent support at its 200-day moving average -- a trendline it has only settled beneath once since February. Looking back, TRV has been in cool-down mode since a recent run up to its July 16 all-time high, guided lower by pressure from its 100- and 20-day moving averages. As of now, Travelers is headed towards its worst percentage drop since December, off nearly 7% for the month. 

Analysts have already been cautious on the equity, with 14 of those in coverage calling TRV a "hold" or worse, while only three say "strong buy." Adding to this, the consensus 12-month target price of $144.56 is right in line with last night's close. 

Short sellers have been piling on lately, up 12.7% in the last reporting period, but there's still plenty of room on the bearish bandwagon. The 3.63 million shares sold short represent a slim 1.4% of the stock's available float, or three days at TRV's average pace of trading.


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