Citi feels Allstate (NYSE: ALL) should encounter short-term pressure as Street EPS estimates need to come down for 4Q10 as well as 2011 & 2012. There is no change to $37 PT and Buy rating. Cutting $0.13 from 4Q10, $0.10 off 2011 and $0.20 off 2012. It is initiating 2013E of $4.10.From easyBourse:
There is high variability around ALL EPS driving the numbers below the Street, including: CAT losses on Homeowners Insurance; investment yield pressures; life earnings; share repurchase run-rate; and a modestly higher Standard Auto CR owing to flat premiums.
In the near term, Citi estimates the stock could trade down to the $28–$29 range by applying 85% projected 2010 BV of $34.18, or 8x 2011E of $3.50. However, the 12-month TP of $37 is based on its projected YE 2011 BV of $37.14. Note this BV excludes the current $1.2B of unrealized gains on the balance sheet.
Unexpected steep claims from storms in the fourth quarter could mean insurer Allstate Corp will miss consensus estimates when it reports results next month, according to the latest data from Thomson Reuters StarMine.
"It caused a lot of analysts to move their estimates lower on Allstate," said Sri Raman, senior quantitative research analyst at Thomson Reuters.
As a result, Allstate's earnings estimate from StarMine, which weights forecasts according to analyst accuracy, is 18 percent below that of the consensus estimate, calculated by Thomson Reuters....