UPDATE: UBS Upgrades Allstate (ALL) to Buy

UBS analyst Brian Meredith upgraded Allstate (NYSE: ALL) from Neutral to Buy with a price target of $149.00 (from $126.00).

The analyst comments "We are upgrading shares of ALL to Buy as we believe that underlying margin improvement beginning in 2H22 will drive upward EPS estimate revisions and multiple expansion. We believe rate increases in ALL's personal auto business will begin to offset loss trend as frequency comps get easier in 2Q22 and rate starts to catch up to elevated severity trends. There is some similarity to the 2015-2016 time period when personal auto writers experienced elevated severity (albeit to a lesser extent) that caused margin pressure across the industry. Over that time period, ALL's Brand Auto underlying combined ratio deteriorated by 2.1 pts in 2015, remained elevated in 2016 before improving 4.3 pts in 2017. As underlying personal auto margins began to improve y/y in 3Q16, ALL's consensus EPS estimates trended higher and valuation re-rated higher that led to significant share price outperformance. We believe shares should see a similar cadence as margins potentially inflect in 2Q/3Q 2022, if not earlier."

For an analyst ratings summary and ratings history on Allstate click here. For more ratings news on Allstate click here.

Shares of Allstate closed at $123.38 yesterday.

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