Goldman Upgrading Lincoln National (LNC)

Goldman Sachs is upgrading shares of Lincoln National Corporation LNC to Buy. In a note sent to clients Goldman writes, "We believe Lincoln's leverage to rising interest rates and stronger equity markets is greater than that of its peers due to its large variable annuity and secondary guarantee universal life businesses. With the franchise firmly intact and the meaningful rise in the 10-year treasury bond, we expect investor concerns around year-end intangible write-downs to be eliminated. This is important as Lincoln screens attractively on a P/B (0.75X versus peer average of 0.93X) and P/E (7.7X versus 8.7X) basis, but is noticeably more expensive on price-to-tangible book method (1.0X, in line with peers). LNC's current P/E multiple is trading at a 3.2 point discount to its historical average; by far the widest discount in our coverage group (HIG is next closest at 2.4 points). While we were uninspired with LNC's modest share repurchase announcement ($125 million through year-end 2011), we were encouraged by the signal of capital flexibility and believe LNC could be an acquirer of sub-scale 401(k) providers." Shares of LNC gained 29 cents yesterday to close at $28.00.