2. Axis Capital Holdings
Shares of Axis Capital Holdings, Ltd. ( AXS) of Pembroke, Bermuda, closed at $35.80 Monday, returning 14% year-to-date. The shares trade for 0.8 times their reported Sept. 30 diluted book value of $43.57, and for nine times the consensus 2013 EPS estimate of $3.94. The consensus 2014 EPS estimate is four dollars. Based on a quarterly payout of 24 cents, the shares have a dividend yield of 2.68%. Cohen said that "after a catastrophe-mired 2012, AXIS reported sold results" during the first nine months of 2012. For that period, the company reported net income of $513.6 million, or $4.11 a share, improving from a loss of $70.6 million, or 58 cents a share, during the first three quarters of 2011. The company's underwriting income totaled $337.4 million during the first three quarters of 2012, increasing compared to an underwriting loss of $342.3 million a year earlier. The combined ratio improved to 90.8% during the first three quarters of 2012, from 116.3% a year earlier. A combined ratio of over 100% indicates an underwriting loss. Cohen's price target for AXIS Capital is $44, which is "0.9x the estimated year-ahead book value, a multiple that reflects an ROE that should remain under pressure." The analyst called Axis a "longer-term opportunity," and said that "a reduced earnings drag from the new
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