Shares of Skyward Specialty Insurance Group, Inc. SKWD have rallied 47.6% year to date, outperforming the industry’s increase of 30.7%, the Finance sector’s rise of 22.5% as well as the Zacks S&P 500 composite gain of 26.3% in the same time frame. 

Its improved top line, expanded margins and sufficient financial flexibility should continue to drive shares of this specialty property and casualty insurer.

Skyward Specialty Outperforms Industry, Sector & S&P YTD

Image Source: Zacks Investment Research

SKWD shares are trading well above the 50-day moving average, indicating a bullish trend.

Optimistic Analyst Sentiment for SKWD

Three of the six analysts covering the stock have raised estimates for 2024, while five of the six analysts have raised the same for 2025. The consensus estimate for 2024 and 2025 has moved 2.7% and 48.5% north, respectively, in the past seven days.

The Zacks Consensus Estimate for 2024 implies a 45% year-over-year increase, while the same for 2025 suggests a 10.1% increase.

SKWD has a Growth Score of B. The expected long-term earnings growth rate is pegged at 10.3%

Average Target Price for SKWD Suggests an Upside

Based on short-term price targets offered by nine analysts, the Zacks average price target is at $50.33 per share. The average suggests a potential 0.7% upside from Tuesday’s closing price.

SKWD’s Growth Strategy

Skyward Specialty operates in an underpenetrated niche market for which standard insurance coverages are insufficient or inadequate. Thus, with tailor-made products and services, prudent underwriting and technology, this insurer is well poised to capitalize on the market opportunities. Notably, all eight divisions are now at a scale that can sustainably contribute to overall earnings.

Skyward Specialty’s focus on high-return areas that are less exposed to P&C cycles, prudent pricing, better retention and shifting of the business mix toward more profitable lines bodes well for growth. Its combined ratio, measuring its underwriting profitability, has been consistently improving.
 
Its intelligent investment strategy has been paying off well. It is de-risking its portfolio and diverting free cash flow to fixed income.  Notwithstanding the recent rate cuts and the probability of more in the future, a broader invested asset base should help SKWD maintain healthy investment results. 

Skyward Specialty has been strengthening its balance sheet by lowering its debt balance and increasing its cash balance. This, in turn, offers financial flexibility.