UPDATE: Evercore ISI Upgrades American Equity Investment Life Holding (AEL) to Outperform
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Evercore ISI analyst Thomas Gallagher upgraded American Equity Investment Life Holding (NYSE: AEL) from In Line to Outperform with a price target of $46.00 (from $34.00).
The analyst comments "We upgrade AEL to outperform from in-line with a $46 price target, representing 14% upside to the shares. We see a glide path to a more robust valuation as the company executes on its AEL 2.0 initiative, in which it transitions from a traditional spread-based annuity writer to an insurer that derives a greater portion of its earnings from capital light fee-based businesses, similar to an insurance broker. We estimate ~8% of AEL’s earnings will come from fee-based business in 2023 from the Brookfield in-force and flow reinsurance agreements alone, and we see potential for AEL to increase this proportion closer to 15- 20% through additional in-force deals and/or flow reinsurance treaties, and we believe the ramp-up of its offshore reinsurance entity will also accelerate growth of its fee-based earnings stream while improving FCF conversion over time."
Shares of American Equity Investment Life Holding closed at $40.51 yesterday.
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