AIZ Defensively Positioned, But Growth Outlook Cautious

Analysts at JP Morgan reiterate their "neutral" rating on Assurant Inc AIZ, while raising their estimates for the company. The target price for AIZ has been raised from $37 to $39. JP Morgan says, “Earnings exceeded our estimate and margins across all businesses were robust. Poor sales results were the most notable negative. While the company is defensively positioned given its lack of exposure to equity sensitive businesses, strong capital position, and conservative portfolio, our outlook for growth is cautious.” “Our model projects AIZ’s operating EPS to decline 3.4% in 2011 and grow at a low-single-digit rate over the next few years, below our 9-11% growth forecast for the life insurance group. Buybacks and growth in the foreign solutions business should lift results, but earnings are likely to be pressured by declining income in the specialty property and domestic solutions operations…. In the near term, stocks could continue to trade more on macro trends than on company-specific fundamentals, but we believe that the risk-reward is relatively attractive. Operating trends, while mixed, should improve over the next year, marked by healthier balance sheets, a pickup in returns, and a recovery in sales/flows. Also, valuations are attractive, and barring deterioration in macro trends, we project the group to outperform the broader markets,” the analysts add. JP Morgan has raised its EPS estimates for 2010 and 2011 from $4.64 to $4.97 and from $4.60 to $4.80, respectively. More Analyst Ratings here