J.P. Morgan Initiates Coverage on American Equity Investment Life with an Overweight Rating

According to J.P. Morgan, American Equity Investment Life (NYSE: AEL) coverage is initiated with an Overweight rating.

J.P. Morgan said that AEL is an attractive growth story, and we expect the company to generate double-digit EPS growth and a 12-13% ROE over the next three years, both above the life insurance group average. “AEL is trading at 0.6x BV (ex. AOCI) and 4.2x 2012E EPS, and we attribute the depressed multiples primarily to fears about low interest rates and negative sentiment on financials. While the stock may remain volatile given macro uncertainty, we expect the valuation to recover as concerns about AEL's ability to grow in a low rate environment dissipate.”

American Equity Investment closed yesterday at $8.96.