Palomar (PLMR) Stock Forecast & Price Target

Palomar Holdings Inc. is projected to experience strong growth in gross written premiums (GWP), particularly in its inland marine and other property unit, with anticipated increases of 29.4% in 4Q24 and 25.0% in 2025, driven by substantial rate increases in its Hawaii Hurricane book. The company has also made significant strides in its crop insurance sector, raising retention from 5% to 30%, which contributes to an impressive 20% underwriting margin in 2024. Furthermore, revisions in earnings per share (EPS) estimates indicate robust growth potential, with estimates raised to $6.65 for 2025 and $7.90 for 2026, reflecting a positive outlook fueled by enhanced premium growth and improved underwriting performance.

Palomar Holdings Inc. faces a negative outlook due to declining earthquake insurance rates, which decreased by approximately 5% year-over-year in the fourth quarter of 2024, indicating pressures in the commercial insurance market. Additionally, management's limited flexibility in underwriting through program administrators raises concerns about potential future losses if adherence to guidelines is compromised, which further exacerbates the risk to earnings predictability. Moreover, the company's relatively small catastrophe retention of $17.5 million, representing only 5% of total shareholders' equity, poses a significant risk to earnings stability, particularly in the face of catastrophic events that could result in substantial financial disruption.