Shares of Gjensidige Forsikring ASA (OL:GJFS) fell 1.2% on Thursday after Barclays reduced its recommendation on the stock to Underweight from Equal Weight and trimmed its price target to NOK 250 from NOK 280. The bank said the company’s Capital Markets Day (CMD), scheduled for February 26, could act as a negative catalyst for investor expectations.
Barclays indicated it expects the CMD to increase the risk of downward earnings revisions versus what it described as "overly optimistic consensus" in a deteriorating operating backdrop. In its note, the bank quantified a probability-weighted downside of roughly 4% to consensus EPS estimates and about 10% to valuation.
On strategy, Barclays expects Gjensidige’s forthcoming plan to target a combined ratio of around 80%, which the bank views as a smaller improvement than prior strategic targets. The research note identified three principal headwinds that inform its more cautious stance:
- Weaker pricing tailwinds, which could limit near-term margin recovery.
- Increasing competitive pressure outside Norway, suggesting tougher market dynamics in international lines.
- Structural changes in motor insurance arising from the development of autonomous vehicles, creating medium- to long-term disruption risks.
The analyst note also emphasized Norway’s substantial uptake of electric vehicles, which it said account for approximately 90% of new registrations. Barclays argued this high EV penetration raises the country’s exposure to eventual disruption from autonomous vehicles.
The bank referenced an episode in 2017 when rising EV penetration coincided with a spike in claims inflation, which it said led to negative EPS revisions of about 30% and a roughly 20% decline in the share price. Barclays’ updated earnings projections sit below consensus by about 6% on average over 2026-2028, and the lowered price target implies roughly 9% downside from current levels, according to the note.
The downgrade, the adjusted estimates, and the bank’s view of CMD risks together framed Barclays’ decision to move the rating to Underweight and reduce its price target.
Summary
Barclays downgraded Gjensidige to Underweight and cut its price target to NOK 250, citing the company’s upcoming CMD as a likely negative catalyst. The bank pointed to a more modest combined ratio target, weaker pricing momentum, rising competition outside Norway, and structural motor market shifts tied to autonomous vehicles. Norway’s high EV adoption and a prior episode in 2017 that saw claims inflation-related EPS revisions were highlighted as background risks. Barclays’ forecasts are below consensus for 2026-2028 and imply meaningful downside from current stock levels.
Key points
- Barclays downgraded Gjensidige to Underweight and cut the price target to NOK 250 from NOK 280.
- Analyst expects CMD on Feb. 26 to act as a negative catalyst and calculated a probability-weighted downside of ~4% to consensus EPS and ~10% to valuation.
- Key sectors affected include insurance underwriting and the automotive-related motor insurance market, especially where EV and autonomous vehicle adoption are high.
Risks and uncertainties
- Potential for downward earnings revisions if consensus proves overly optimistic - this directly impacts insurer earnings and investor returns.
- Competitive pressures outside Norway could compress margins and affect international insurance operations.
- Structural changes in the motor insurance market from autonomous vehicles and high EV penetration could alter claims patterns and long-term underwriting economics.