U.S. Markets open in 3 hrs 16 mins

UPDATE: Compass Point Initiates Coverage On Allstate As Growth Opportunities Are Constrained

Dwight Einhorn

In a report published Thursday, Compass Point analyst Ken Billingsley initiated coverage on Allstate (NYSE: ALL) with a Neutral rating and $63.00 price target.

In the report, Compass Point noted, “Shares of Allstate have performed very well for the past three years. We believe the market place for Allstate's products will remain favorable, but do not see any near term catalysts that should push the company's current pricing multiples higher.

"Non-CAT weather continues to take a bite out of earnings despite lower major CAT activity, competitive pressure from regional and local insurers will likely increase which could pressure premium rates lower, and plans to expand agencies and policies in force could keep the expense ratio flat. Offsetting these near term concerns is a company that has regularly outperformed its personal lines peers on an underwriting basis, which is key to maintaining a healthy balance sheet. Improving demographic trends and increasing auto purchases should help to maintain annual premium growth in the single digit range. We do not expect a major near-term shift that will increase the size of the market (such as immigration reform expanding the number of insurance buyers, or a hardening market that raises premium rates) or major trends that would significantly reduce costs. With growth opportunities constrained, we expect the company will remain committed to its hefty stock buyback program.

"We rate Allstate a Neutral with a $63 price target.”

Allstate closed on Wednesday at $61.53.

View more ratings on ALL

See more from Benzinga

© 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.