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Unum group (NYSE:UNM) stock goes up 6.3% in Monday morning trading after a Jefferies analyst upgraded the life insurance company’s stock to Buy from Hold due to its lower price-to- absolute and relative earnings ratios. historical averages, analyst Suneet Kamath wrote in a note to clients.
While the stock is up nearly 70% in 2022, UNM’s forward P/E ratio stands at just 5.43x at press time.
Kamath explained that the upbeat coverage comes at a time when the banking crisis raises questions about the possibility of liquidity pressures on the broader life insurance space, noting that a Such an event is unlikely to happen.
This is a low-probability event, especially because of “1) the diverse nature of the industry’s business mix; 2) the complexity involved in approaching cash values (i.e., inertia ); 3) surrender charges); and 4) ongoing demand for product/protection”, the note said.
For Unum (UNM), Kamath points out that “the core business is doing well” and that “it has one of the strongest excess capital positions” in the industry.
And he expects UNM to see more sources of EPS growth such as stronger revenue growth. Driven by higher premiums across its core segments, Unum’s (UNM) after tax in the fourth quarter adjusted operating income was $1.43 per share, though weaker than expected, up from $0.89 in the previous quarter.
At the end of January, SA contributor Aristofanis Papadatos marked UNM as Buy with a P/E ratio of only 6.7 times at that time.
