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Palomar Holdings Inc. PLMR has been trading above its 50-day simple moving average (SMA), signaling a short-term bullish trend. As of May 21, 2025, its share price was $161.54, down 2.1% from its 52-week high of $165.00.
The 50-day SMA is a key indicator for traders and analysts to identify support and resistance levels. It is considered particularly important as it is the first marker of an uptrend or downtrend.
Palomar aspires to be a dominant player in the crop insurance sector, targeting a position among the top 10 crop premium writers in the United States by 2025. The company also projects that crop premiums will grow to $500 million in the intermediate term.
PLMR has gained 53% year to date, outperforming the industry, the sector as well and the Zacks S&P 500 composite’s return in the same time frame.
PLMR shares are trading at a premium to the industry. Its price-to-earnings of 5.46X is higher than the industry average of 1.56X.
Shares of other insurers like Horace Mann Educators HMN, Lemonade LMND and Employers Holdings Inc. EIG are trading at a multiple lower than the industry average.
Based on short-term price targets offered by six analysts, the Zacks average price target is $174.50 per share. The average indicates a potential 9.7% upside from the last closing price.
The Zacks Consensus Estimate for 2025 and 2026 earnings has moved 2 cents north in the past seven days, reflecting analyst optimism.
The Zacks Consensus Estimate for 2025 earnings is pegged at $6.95, indicating a 36.5% year-over-year increase on 41.5% higher revenues of $777.4 million. The consensus estimate for 2026 is pegged at $8.18, indicating a 17.8% year-over-year increase on 25.6% higher revenues of $976.7 million.
PLMR has a Growth Score of B.
Return on equity, which reflects the company’s efficiency in utilizing shareholders' funds, was 20.6% in the trailing 12 months, better than the industry average of 7.8%.
Palomar has raised its capital investment significantly, reflecting its efficiency in utilizing funds to generate income. ROIC in the trailing 12 months was 19.9%, higher than the industry average of 5.9%.
Palomar’s fee-based platform, PLMR-FRONT, is positioned to drive medium-term growth. The addition of this revenue stream is expected to strengthen its earnings foundation.
The increasing volume of policies across multiple business lines, strong retention rates, expansion into new geographic areas and distribution channels, and the formation of new partnerships are expected to drive premiums. Palomar also projects that crop insurance will contribute around $200 million in premiums by 2025.
PLMR identifies Surety as an attractive, long-term growth opportunity. Like crop insurance, Surety is not correlated with the traditional property and casualty insurance cycle, offering diversification and stability.
Net investment income is expected to rise, supported by a high-quality fixed-income portfolio, higher average investment balances, and improved yields. This solid investment base is poised to generate strong returns.
Palomar’s risk transfer strategy reduces exposure to major catastrophic events, helping to stabilize earnings and improve its combined ratio.
Financially, the insurer maintains a strong capital position and a debt-free balance sheet. As part of its shareholder return initiatives, Palomar continues to execute share buybacks.
With these strengths in place, Palomar anticipates generating adjusted net income between $186 million and $1200 million in 2025.
Palomar is positioning itself as a key player in the crop insurance sector, with its growing emphasis on Surety signaling strong prospects for future expansion. The company’s diverse product suite, ongoing geographic growth, onboarding of new producers, strategic partnerships with other insurers, and implemented rate increases are all poised to fuel its momentum.
As a specialty insurer, Palomar leverages reinsurance to effectively mitigate risk exposure. This strategy enables the company to underwrite policies with sufficient coverage while managing potential losses, contributing to a stable and resilient business model.
Given its strong fundamentals and growth potential, this Zacks Rank #2 (Buy) stock, despite its premium valuation, appears to be a compelling investment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
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