Shares in Suncorp Metway Ltd surged 10 per cent on Thursday after the general insurer reiterated its full year earnings guidance and a broker upgraded it to "Buy".
Suncorp told an investor conference in Sydney on Wednesday that its annual earnings guidance for its banking, insurance and wealth management arms remained in place.
Citigroup on Wednesday night put a "Buy" rating on Suncorp stock and Merrill Lynch kept its "Buy" rating unchanged.
Suncorp shares rose 10.37 per cent or $1.41 to $15.01 on Thursday.
"Whilst we can be cynical as to the quality of the earnings it might deliver, for many the fact it is on track to deliver will be a surprise," Merrill analyst Andrew Kearnan said.
"We also think there are signs emerging of a turnaround in premium rates in the Australian and New Zealand retail classes, which bodes well for longer term profitability."
While Merrill still has reservations about Suncorp related to risks in the insurance and banking sectors and its new executive team, Mr Kearnan said the stock has been over-sold.
Citigroup said a recovery in the personal lines market would improve Suncorp's profitability.
A merger between competitors Insurance Australia Group Ltd and QBE Insurance Group Ltd would also benefit Suncorp, Citigroup noted.
Suncorp on Wednesday said it still expected earnings at its bank to rise by between 10 and 12 per cent, including the impacts of the credit crunch.
Its general insurance division is still expected to report an insurance trading ratio between nine and 12 per cent.
Despite tough sharemarket conditions, Suncorp expects its wealth management arm to deliver underlying profit growth of more than 10 per cent.
SUN Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
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