Credit Suisse Starts Assurant (AIZ) at Neutral
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Credit Suisse initiates coverage on Assurant (NYSE: AIZ) with a Neutral rating and a price target of $93.00.
Analyst John Nadel commented, "Despite an improved business mix, significant excess capital position and attractive free cash flow profile, we rate AIZ Neutral as we see little upside from current levels. The main tenants of our thesis include: 1) we believe consensus EPS estimates are too high in 2017/18E; 2) even after taking into account excess capital in the valuation and ascribing an above-average multiple of 12x to the ongoing operations, we believe the risk/reward at current levels is relatively unattractive; and 3) we believe management’s 15%+ average annual EPS CAGR (excl. cats) through 2020 and 15% ongoing ROE could prove difficult to achieve in the current operating environment. While we think management has done an excellent job executing its plan to simplify the business and deploy capital thoughtfully, we see less accretion from buybacks (owing to share price appreciation) and believe that a larger portion of excess capital is likely to be deployed via M&A. Our 2017/18E EPS are 3-4.5% below consensus, although we note there could be upside to our estimates if the pace of buybacks is accelerated or if catastrophe activity remains benign."
Shares of Assurant closed at $89.94 yesterday.
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