On Thursday, Allstate Corporation (NYSE:ALL) received confirmation of its Outperform rating and a $189.00 stock price target from Keefe, Bruyette & Woods. The affirmation follows Allstate's disclosure of estimated March catastrophe losses totaling $328 million pre-tax, or $259 million after-tax.
These losses were primarily driven by a single hail event accounting for 80% of the costs, which were partially mitigated by favorable developments in prior period catastrophe reserves.
Allstate reported the implementation of auto rate increases in March, with Allstate Brand rates rising by 0.9% and National General by 0.7%. Additionally, homeowners' insurance rates saw an increase, with Allstate Brand up by 0.7% and National General by 0.9%. These adjustments reflect the company's ongoing effort to manage its risk and pricing strategy.
In light of the recent financial updates, the firm has adjusted its earnings estimates for Allstate. The 2024 earnings estimate has been raised to $13.55 from the previous $12.85, while the 2025 earnings per share (EPS) estimate remains unchanged at $17.20. The revised forecast assumes first-quarter 2024 catastrophe losses of $731 million, a reduction from the earlier estimate of $962 million.
The $189 stock price target is based on an 11.0 times multiple of the firm's projected 2025 earnings per share. The Outperform rating and price target remain in place as the firm views the stock favorably in light of the recent financial performance and strategic rate adjustments.
Allstate's recent financial disclosures and strategic pricing actions are part of the company's broader efforts to navigate the dynamic insurance market. The firm's analysis suggests confidence in Allstate's operational strategy and future earnings potential.
InvestingPro Insights
InvestingPro data highlights Allstate Corporation's market presence with a market capitalization of $44.57 billion. Despite a challenging P/E ratio of -140.83, reflecting market skepticism about current earnings, the company has demonstrated revenue growth, with an 11.05% increase over the last twelve months as of Q4 2023.
This growth is further underscored by a significant EBITDA increase of 251.42% in the same period, indicating improved operational efficiency.
Two InvestingPro Tips that relate closely to the article are Allstate's track record of raising its dividend for 13 consecutive years and the expectation for net income growth this year. These insights suggest a stable financial foundation with the potential for increased profitability, aligning with Keefe, Bruyette & Woods' positive outlook.
Moreover, the company's recent strategic pricing actions in auto and homeowners' insurance could support this trajectory.
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