Barclays Initiates Coverage on Allstate with Underweight Rating and $175 Price Target
Barclays recently initiated coverage on Allstate (NYSE:ALL) with an Underweight rating and a price target of $175, expressing caution about the insurance company's growth prospects and earnings potential. The analyst from Barclays highlighted concerns about Allstate's ability to improve growth, especially within its exclusive agent channel. Additionally, the firm pointed out that Allstate's expense ratio may trend upwards as the company focuses on growth, posing a risk to earnings per share estimates.
Barclays also noted that Allstate's current premiums to surplus ratio is significantly higher than historical levels, which could lead to lower levels of share repurchases in the future. The firm believes that Allstate may struggle to meet both growth and EPS expectations, leading to a stretched valuation. Despite significant catastrophe losses in July due to Hurricane Beryl, Keefe, Bruyette & Woods maintains an Outperform rating on Allstate, expressing confidence in the insurer's operational strength.
In a strategic move, Allstate announced the sale of its employer voluntary benefits business, freeing up capital for reinvestment into core insurance lines. TD Cowen raised Allstate's price target and maintained a Buy rating, emphasizing the insurer's attractive estimated price-to-earnings ratio for 2025. However, CFRA downgraded Allstate to Hold, while other firms adjusted their ratings based on potential benefits from recent divestitures and improvements in auto margins.
In conclusion, Allstate's future performance may be impacted by challenges in growth and earnings, leading to a cautious stance on the stock's valuation. Investors should consider the various analyst opinions and strategic moves made by Allstate to make informed decisions about their investments in the company.