Insurer MetLife Receives Upgrade to Buy

NEW YORK ( TheStreet) -- MetLife ( MET) was upgraded by TheStreet Ratings to a buy from a hold on Monday and is undervalued compared to its peers.

MetLife has an estimated price-to-earnings ratio for next year of 7.41. The average for life insurance companies is 13.05. Aflac ( AFL) and Assurant ( AIZ) also have low forward P/Es of 7.03 and 6.79, respectively.

Of the 23 analysts who cover MetLife, 18 consider it a buy; five rate it a hold.

Shares of MetLife hit a 52-week high a year ago of $48.72. The stock's 52-week low of $25.61 was set on Oct. 4. The stock has risen 20.69% year to date to $37.63, its closing price on Friday.

TheStreet Ratings gives MetLife a B- grade with a $42.02 price target.

"We first wrote about the disconnect between share prices and CDS spreads in September (Disconnect between MET/PRU valuations & CDS a bullish sign, 08 September 2011) and we believe that the trading opportunity remains in place today," Bank of America Merrill Lynch analysts wrote in a Jan. 30 report. "Since the beginning of the financial crisis, CDS spreads have explained between 50%-60% of life insurance P/BV multiples. We believe that this relationship should be much less significant over the long term. However, even in the current, CDS-driven environment (i.e., excessive concern about tail risk), implied valuations based on CDS suggest that LNC should be at least 30% higher today and MET should be 20% higher."

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These stocks also were upgraded to buy by TheStreet Ratings on Monday: Martin Marietta Materials ( MLM), Selective Insurance Group ( SIGI), Tidewater ( TDW) and Sealed Air ( SEE).

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Martin Marietta was upgraded to a buy from a hold by TheStreet Ratings.

Eleven of the 17 analysts who cover the company rate it a hold. Four consider it a buy and two give it a sell rating. Martin Marietta's forward P/E is 35.48; the average among the building materials companies is 41.15. Lennox International ( LII) has a forward P/E of 12.87; Owens Corning ( OC) has a forward P/E of 12.96.

The stock closed Friday at $84.29 and has risen 11.78% year to date. Martin Marietta's stock hit a 52-week high of $63.55 on March 3. TheStreet Ratings gives Martin Marietta a B grade with $96.15 price target.


Selective Insurance Group was upgraded to a buy from a hold by TheStreet Ratings.

Five of the seven analysts who cover the stock rate it a hold. One considers it a buy and one gives it a sell rating. Selective Insurance's forward P/E is 11.32; the average for property and casual insurance companies is 20. Horace Mann Educators ( HMN) has a forward P/E of 8.82.

Selective closed Friday at $18.82 and has increased 6.15% year to date. Selective Insurance's stock hit a 52-week high of $19 on Friday.

TheStreet Ratings gives Selective Insurance a B- grade with a $21.02 price target.

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Tidewater was upgraded to a buy from a hold by TheStreet Ratings.

Five of the eight analysts who cover the company rate it a hold. One rates it a buy and two consider it a sell. Tidewater's forward P/E is 13.19; the average for the oil equipment and services companies is 14.08. Rowan ( RDC) has a forward P/E of 11.6; Atwood Oceanics' ( ATW) forward P/E is 9.42.

Tidewater stock closed Friday at $57.91 and has risen 17.46% year-to-date. Tidewater's stock hit a 52-week high of Feb. 8, 2011.

TheStreet Ratings gives Tidewater a B grade with a $66.78 price target.


Sealed Air was upgraded to a buy from a hold by TheStreet Ratings.

Six of the 11 analysts who cover Sealed Air rate it a hold; five consider it a buy. Sealed Air's forward P/E is 12.5; the average for containers and packaging companies is 12.76. Crown Holdings ( CCK) has a forward P/E of 10.21; Rock-Tenn ( RKT) has a forward P/E of 8.96.

Sealed Air closed Friday at $20.71; it has risen 20.34% year to date. The stock's 52-week high of $28.77 was set on Feb. 14, 2011.

TheStreet Ratings gives Sealed Air a B grade and a $23.12 price target.

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-- Written by Alexandra Zendrian

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