NEW YORK (TheStreet) -- Shares of Lincoln National Corp. (LNC) are down 0.71% to $54.37 today after Deutsche Bank downgraded the company to "hold" from "buy," but raised its price target to $62 from $60.
The holding company, which operates multiple insurance and retirement businesses through subsidiary companies, requires even further re-rating, analysts said.
"While we believe that further re-rating remains, Lincoln National's strong performance over the past year and a half suggests that the majority of upside at this time should come from earnings and book value of equity per share growth," analysts said, adding, "At the same time, we expect earnings per share growth to slow to mid-to-high single digits, limiting upside to the mid-teens--not enough on a risk-adjusted basis to continue to recommend the name at this time."
Additionally, analysts expect fee income to slow and assets under management growth in the annuities and retirement segments to decrease.
Separately, TheStreet Ratings team rates LINCOLN NATIONAL CORP as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate LINCOLN NATIONAL CORP (LNC) 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, impressive record of earnings per share growth, revenue growth, notable return on equity and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows low profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- LINCOLN NATIONAL CORP has improved earnings per share by 34.1% 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, LINCOLN NATIONAL CORP increased its bottom line by earning $4.53 versus $4.46 in the prior year. This year, the market expects an improvement in earnings ($5.80 versus $4.53).
- Despite its growing revenue, the company underperformed as compared with the industry average of 20.5%. Since the same quarter one year prior, revenues rose by 13.4%. 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, LINCOLN NATIONAL CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- Despite currently having a low debt-to-equity ratio of 0.35, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further.
- You can view the full analysis from the report here: LNC Ratings Report