Q: FFH is down about 5 % today on a downgrade to neutral from BMO- Any thoughts on whether this a buy, sell or a hold
5i Research Answer:
The 11% decline YTD has brought P/E to a very low 8.9X. BMO cites softening global insurance markets, declining underwriting income and moderating investment income growth. BMO is essentially becoming more conservative on projected operating income growth. These are probably valid concerns, but, we think, fully reflected in the very low valuation now. It is a classic value stock, which goes through periods of love and hate. We would see it as a BUY.