Keefe Bruyette maintains Outperform on Allstate By Investing.com

Keefe, Bruyette & Woods maintained its Outperform rating on Allstate (NYSE:ALL) with a steady price target of $208.00. The firm’s position comes after Allstate reported significant catastrophe losses for July. The insurance giant disclosed $542 million in losses stemming from 20 separate events, which included an estimated $226 million due to Hurricane Beryl.

The total catastrophe losses for July reached $587 million, indicating a $45 million release from prior-period catastrophe loss reserves.

The firm has adjusted its Q3 and full-year 2024 earnings per share (EPS) estimates for Allstate to $1.61 and $13.10, respectively, down from the previous $2.25 and $13.85.

This revision is based on the new assumption of $1.811 billion in third-quarter catastrophe losses, an increase from the earlier estimate of $1.556 billion. This figure surpasses the consensus of $1.305 billion in predicted losses among analysts.

Despite the increased loss estimates for the third quarter, Keefe, Bruyette & Woods remains optimistic about Allstate’s future performance. The firm has chosen to uphold its EPS forecasts for 2025 and 2026 at $16.95 and $18.80, respectively. The $208 price target is anchored on a 12.3x multiple of the firm’s projected 2025 earnings per share for Allstate.

The reiteration of the Outperform rating indicates Keefe, Bruyette & Woods’ confidence in Allstate’s operational strength and potential for recovery.

Allstate Corporation (NYSE:) reported significant losses due to catastrophes in July, amounting to an estimated $542 million pre-tax. The losses, which were largely attributed to Hurricane Beryl, were disclosed as part of Allstate’s routine financial updates.

In recent developments, Allstate has been downgraded from Buy to Hold by CFRA, while maintaining a price target of $200.00.

The insurance company also announced the sale of its employer voluntary benefits business to StanCorp Financial for $2 billion, a transaction expected to result in a $600 million profit. This sale is projected to free up approximately $1.6 billion in capital for reinvestment into the company’s core auto and homeowner insurance lines.

Analyst firms, including TD Cowen and Piper Sandler, have maintained positive ratings for Allstate, acknowledging the potential benefits from the divestiture. Wells Fargo upgraded Allstate from Underweight to Equal Weight, recognizing improvements in auto margins and an anticipated bolstering of capital.

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