FBR Capital Reiterates an 'Outperform' on Allstate (ALL); Favorite Large-Cap Insurer

November 5, 2009 10:51 AM EST

FBR Capital reiterates an Outperform rating on Allstate (NYSE: ALL) and raising price target to $46 from $45.

FBR analyst says, "Earnings estimates increased dramatically, as many assumed that Allstate would report few catastrophe losses in 3Q09. While Mother Nature was kinder to the company this quarter compared to the past several quarters, Allstate still experienced $407M of catastrophe losses, which translates into about $0.49 on an after-tax per share basis. However, 3Q09 is still a step in the right direction toward the true earnings power for the company. We believe that the stabilization of profitability, combined with an expected ability to repurchase shares, will put Allstate back on track. Shares are trading at 6.7x projected 2010 earnings and 0.92x 3Q09 book value. Such valuation for a company in an oligopolistic business with a massive market share and significant competitive advantages, such as a large marketing budget, brand name, and cost advantage, is somewhat absurd, in our opinion. Allstate remains our favorite large-cap insurer in our coverage universe. In the bullets below, we highlight why we think the stock should perform well going forward."

To see more analyst ratings on ALL Click Here.

The Allstate Corporation, through its subsidiaries, engages in the personal property and casualty insurance business, as well as in the life insurance, retirement, and investment products business in the United States and Canada.

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