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Allstate Investors, Are You In Good Hands? Deutsche Downgrades Stock Seeing Resistance Ahead

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Allstate Investors, Are You In Good Hands? Deutsche Downgrades Stock Seeing Resistance Ahead
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Dennis Haysbert famously asks TV viewers if they are in "good hands" with their insurance plans. But ask analysts at Deutsche Bank if a position in Allstate Corp (NYSE: ALL) would be in "good hands" in a portfolio and the answer is not necessarily.

Joshua Shanker downgraded Allstate's stock from Buy to Hold with a price target boosted from $90 to $96, which implies limited upside ahead.

Allstate's bullish story began in late 2015 when new pricing strategies would generate a 20-percent compounded annual growth rate, the analyst explained. But fast forward to present day and the insurance company delivered a performance that was "well in excess" of what was expected two years ago.

As is typically the case, years of strong growth will be followed by a cooling down period and Allstate is no exception. After reaching "historically best" underwriting margins the company's ability to continue growing earnings will now "meet resistance." The analyst's $7.45 EPS estimate for 2018 implies a normalized contraction on a year-over-year growth from a $7.05 per share estimate for 2017.

Allstate is trading at a price-to-book multiple of 1.8x and investors who don't already own a position should avoid the "less attractive" stock. Also, at 12.5-13.5x 2018 earnings, Allstate's stock is valued in-line with consensus estimates for large-cap peers.

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Latest Ratings for ALL

DateFirmActionFromTo
Jul 2018CitigroupMaintainsBuyBuy
Jul 2018BuckinghamUpgradesUnderperformNeutral
Jul 2018B. Riley FBRMaintainsNeutralNeutral

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Posted-In: insurance insurance companies insurance stocks Joshua ShankerAnalyst Color Downgrades Price Target Analyst Ratings Best of Benzinga

 

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