Barclays Underweights Allstate with $175 Price Target, Analyst Cautious on Growth Prospects
Barclays initiated coverage on Allstate (NYSE:ALL) with an Underweight rating and a price target of $175, expressing concerns over the insurance company's growth prospects and earnings potential. The firm highlighted retention challenges within Allstate's exclusive agent channel, which could offset growth in the direct channel.
The analyst from Barclays cautioned that the Street may be overly optimistic about Allstate's ability to improve loss ratios while maintaining below-average expense ratios. As Allstate focuses on growth, the expense ratio is expected to rise, potentially impacting earnings per share. Additionally, Allstate's current premiums to surplus ratio is elevated, prompting Barclays to anticipate a reduction in the future, potentially affecting share repurchases.
Barclays believes Allstate faces challenges in meeting growth and EPS expectations, leading to a stretched valuation. The firm set a new price target of $175, indicating a cautious outlook on the stock's performance.
In other news, Allstate Corporation revealed significant catastrophe losses due to Hurricane Beryl, prompting Keefe, Bruyette & Woods to revise earnings estimates. Despite the losses, the firm maintains an Outperform rating on Allstate, citing operational strength. Allstate's sale of its employer voluntary benefits business to StanCorp Financial for $2 billion is expected to boost reinvestment in core insurance lines.
TD Cowen raised Allstate's price target to $224, maintaining a Buy rating, citing an attractive P/E ratio and strong policy growth outlook. However, CFRA downgraded Allstate to Hold, with a price target of $200, acknowledging potential benefits from recent divestitures and auto margin improvements.
In summary, Allstate faces challenges in growth and earnings, with analysts divided on the stock's future performance. Investors should monitor Allstate's ability to navigate these challenges and deliver on expectations.
This content provides insights into Allstate's current position in the market and how recent developments could impact its stock performance. Investors should consider these factors while making investment decisions.
