American Equity Investment Life (AEL) Rises on Upgrade to Outperform at FBR Capital

February 20, 2014 3:45 PM EST
Get Alerts AEL Hot Sheet
Price: $23.44 +1.69%

Rating Summary:
    5 Buy, 5 Hold, 0 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 6 | Down: 10 | New: 6
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American Equity Investment Life Holding (NYSE: AEL) is 4% higher Thursday after FBR Capital upgraded shares from Market Perform to Outperform with a price target of $25 after the recent pullback.

"We think lower sales expectations (increased private equity competition could put annual AEL sales in the $3B to $4B range), convert tender dilution (the end of this process is in sight), and execution on achieving a 300-bp investment spread (we forecast 285 bps in 2014) are now much better priced in with shares at 8.2x 2015E EPS and 1.1x BV," analyst Randy Binner said. "Valuation peaked at 11.5x 2015E EPS and 1.4x BV ex-AOCI earlier this year. We remain bullish on growth prospects for the indexed annuity product, which is AEL's specialty, as it still comprises only 15% of industry annuity sales. AEL's entrance into the broker/dealer channel for the first time could materially augment sales this year and serve as a new sales contributor as indexed annuity distribution evolves."
For an analyst ratings summary and ratings history on American Equity Investment Life Holding click here. For more ratings news on American Equity Investment Life Holding click here.

Shares of American Equity Investment Life Holding closed at $20.90 yesterday.

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