On Thursday, Jefferies adjusted its outlook on Allstate (NYSE:ALL), increasing the insurer's price target from $231.00 to $267.00, while maintaining a Buy rating. The firm's analysis suggests a positive shift in Allstate's auto and home insurance business segments, projecting market share gains and stronger margins.
The revised price target represents a substantial 16% increase from the previous target and indicates a 44% upside potential for Allstate's shares. Jefferies' assessment points to a temporary setback in the Personal Injury Protection (PIP) auto insurance miss as being driven by timing, associated with renewal rate pressures from increased rates.
The firm anticipates that these renewal rates will start to improve, although they may remain below the long-term average. This expected change is likely to support stronger new business volumes, leading to market share gains in both auto and home insurance sectors for Allstate.
In light of these factors, Jefferies has significantly raised its earnings per share (EPS) estimates for Allstate through the year 2026E, positioning the company's financial outlook above the average Wall Street expectations. The improved projections for auto and home insurance margins have been a key factor in this optimistic stance.
Jefferies concluded its analysis by selecting Allstate as its Franchise Pick, replacing Progressive Corp (NYSE:PGR) in this favored position. The endorsement reflects the firm's confidence in Allstate's potential for growth and profitability in the coming years.
In other recent news, Allstate Corporation (NYSE:ALL) has posted encouraging financial results in the third quarter of 2024. The insurance provider reported total revenues of $16.6 billion, a 14.7% year-over-year increase, and a net income of $1.2 billion, with an adjusted net income of $3.91 per share. The Property-Liability business, in particular, demonstrated robust performance, with premiums rising by 11.6% to $13.7 billion.
Keefe, Bruyette & Woods, a financial services firm, has maintained its Outperform rating on Allstate's stock, raising the price target from $222.00 to $225.00. The firm has revised its earnings per share estimates for Allstate for 2024, 2025, and 2026, citing the company's better-than-expected Q3 performance. The new EPS forecasts stand at $15.35, $18.30, and $20.30 respectively.
Among other recent developments, Allstate announced the sale of its Employer Voluntary Benefits business for $2 billion, which is expected to close in the first half of 2025 and generate about $1.6 billion in capital. The company's investment income rose to $783 million, driven by higher fixed income yields, and its Protection Plans business revenue grew by 23.1% year-over-year to $512 million. These updates underscore Allstate's strategic efforts to strengthen its market position and enhance customer retention.
InvestingPro Insights
Jefferies' optimistic outlook on Allstate aligns with several key metrics and insights from InvestingPro. The company's market cap of $50.42 billion and P/E ratio of 12.25 suggest a solid financial foundation. Allstate's revenue growth of 11.67% over the last twelve months and 14.69% in the most recent quarter supports Jefferies' projection of market share gains.
InvestingPro Tips highlight Allstate's strength as a prominent player in the insurance industry, with expectations of net income growth this year. This corroborates Jefferies' increased EPS estimates. Additionally, Allstate has maintained dividend payments for 32 consecutive years, demonstrating financial stability and shareholder commitment.
The company's YTD price total return of 37.08% and 1-year return of 48.96% reflect strong market performance, aligning with Jefferies' bullish stance. With analysts predicting profitability this year and 11 analysts revising earnings upwards, the outlook appears positive.
For investors seeking more comprehensive analysis, InvestingPro offers additional tips and insights on Allstate. Currently, there are 10 more InvestingPro Tips available, providing a deeper understanding of the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.