Deutsche Bank Reports Aflac Upgraded To Buy

In a report published by Deutsche Bank, Aflac AFL is upgraded to Buy.

Deutsche Bank said that Aflac's stock is down 10% YTD vs. 0% for the life group and up 2% for the S&P 500. “This includes a 9% decline over the past three trading days (reflecting a $2.3 bn loss of market cap). Aflac's strong and steady capital generation $2.5 bn annual stat op income) should help to offset potential losses from Japan and the investment portfolio. The P/E multiple at 8x (vs 5-yr avg of 13x and 10-yr avg of 16x) presents an attractive risk-reward opportunity, in our view. We based our $60 target price on a 10x P/E multiple. A 13x P/E multiple is more appropriate given the ROE and growth profile, but we apply a discount given the risks in the investment portfolio. Downside risks include increased credit deterioration, continued low interest rates, a decline in the yen, and execution risk of management's sales and marketing strategies.”

Aflac closed yesterday at $50.89.