Story updated at 10 a.m. to reflect market activity.
Torchmark fell -0.7% to $79.25 in morning trading.
Bank of America/Merrill Lynch analysts said the downgrade is a valuation call based on an $87 price target for the stock.
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TheStreet Ratings team rates TORCHMARK CORP as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
"We rate TORCHMARK CORP (TMK) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, revenue growth, notable return on equity and attractive valuation levels. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 25.68% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, TMK should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- TORCHMARK CORP has improved earnings per share by 16.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, TORCHMARK CORP increased its bottom line by earning $5.70 versus $5.43 in the prior year. This year, the market expects an improvement in earnings ($6.23 versus $5.70).
- Despite its growing revenue, the company underperformed as compared with the industry average of 7.4%. Since the same quarter one year prior, revenues slightly increased by 3.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Insurance industry and the overall market on the basis of return on equity, TORCHMARK CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- You can view the full analysis from the report here: TMK Ratings Report