BofA Securities has reduced its 12-month price objective for AXIS Capital (NYSE:AXS) to $115.00 from $119.00 and kept a Neutral rating on the shares. The revised target sits close to InvestingPro's Fair Value indication, which signals that AXIS may be modestly undervalued given a current price-to-earnings ratio of 8.57, notably below industry averages.
The change in BofA's valuation follows AXIS Capital's fourth-quarter 2025 results, which outperformed both BofA's projection of $3.03 per share and the Street consensus of $3.23 per share. InvestingPro data also shows upward earnings revisions from analysts, with eight analysts having increased their forecasts for the coming period.
In BofA's assessment, the quarter's earnings beat was driven primarily by three items: lower catastrophe losses that contributed $0.36 per share, additional prior-year net favorable reserve releases adding $0.21 per share, and a lower effective tax rate that added $0.19 per share. These positive drivers were counterbalanced in part by the company's expense ratio, which deteriorated and trimmed earnings by $0.35 per share, and by slightly weaker investment income, which subtracted $0.05 per share.
BofA also highlighted tax-rate dynamics in the quarter. AXIS Capital recorded an effective tax rate of 13.9% in Q4 2025, versus a 19.3% rate across the first nine months of 2025. The firm indicated it expects a run-rate tax rate of approximately 19% going forward.
Separately, AXIS Capital Holdings Ltd reported strong Q3 2025 results earlier, exceeding analyst expectations. The company posted earnings per share of $3.25 against a forecast of $2.87 and reported revenue of $1.67 billion compared with an anticipated $1.59 billion. In a related capital-markets move, AXIS agreed to repurchase about $238 million of common stock from Stone Point Capital's T-VIII PubOpps LP, representing roughly 3.1% of outstanding common shares. Following that transaction, Stone Point Capital will no longer hold any common shares in the company.
Analyst coverage of AXIS Capital shows a range of viewpoints. BofA downgraded the stock from Buy to Neutral, citing the company's strong share-price performance over the past two years as a rationale for a more cautious stance. By contrast, Mizuho began coverage with an Outperform rating, noting expectations for faster net premiums written growth in coming years. Keefe, Bruyette & Woods raised its price target on AXIS to $121 while maintaining an Outperform rating, a move the firm said followed the company's share-repurchase announcement. These divergent actions reflect varied assessments among sell-side analysts about AXIS Capital's near-term trajectory.
Context and implications
AXIS's most recent quarters highlight the interplay between underwriting outcomes, reserve development and tax timing in driving reported earnings. The firm's Q4 2025 results show how lower catastrophe losses and reserve releases can offset pressures from operating expenses and investment income. At the same time, the share repurchase and divergent analyst ratings underscore differing views on capital allocation and growth prospects.
Investors and market participants will likely watch future quarters for whether the favorable reserve development and lower catastrophe activity persist and whether expense trends and investment returns normalize to prior expectations.