- The shares of Allstate Corp (NYSE: ALL) have received a price target of $165 from Raymond James. These are the details.
The shares of Allstate Corp (NYSE: ALL) have received a price target of $165 from Raymond James. And Raymond James analyst Gregory Peters upgraded Allstate from an “Outperform” rating to a “Strong Buy” rating while increasing the price target from $145.
Peters adjusted the rating after Allstate released its February Implemented Auto Rates report and also hosted its first Special Topic Investor Call which focused on auto profitability. And Allstate management reported the company achieved an average 9.7% rate increase across 11 locations in its Allstate auto brand and an average of 5.9% across 10 locations in its National General auto brand in February.
“ALL has now achieved 41 rate increases averaging 7.8% across 53% of its Allstate brand auto written premiums since the beginning of 4Q21. We believe ALL has the biggest opportunity for valuation rerating over the next 18 months,” wrote Peters in a research note. “We expect management’s aggressive approach to rate increases and improving auto profitability to be a catalyst for the relatively undervalued stock. We also believe previous strategic decisions have been overlooked even though there are potential longer-term positive consequences for the company’s competitive position and ROE profile. We believe on-going multi-year transformative growth strategy including the reduction in expenses will improve the competitive position while last year’s divestiture of the life business will lead to a higher longer-term ROE profile.”
Peters expects a positive shift in shareholder sentiment for Allstate’s management team towards the higher levels achieved in 2020 when the company leads the entire auto insurance market with the Allstate Shelter-in-Place Payback concept – which returned a $1 billion premium to customers.
The increased price target assumes Allstate can trade at ~13.4x the 2023E operating EPS – which is still below its immediate auto peers FY23 P/E average of 18.4x.
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