NEW YORK (TheStreet) -- Allstate Corp. (ALL - Get Report) stock is up 0.31% to $71.17 in pre-market trading Wednesday after Credit Suisse initiated coverage with an "outperform" rating and $84 price target.
Allstate is the publicly held personal lines property and casualty insurer in the U.S.
"We think Allstate has more capital return and return on equity to offer," analysts said.
Allstate could reduce the capital supporting its home business due to an improving risk profile, Credit Suisse said, adding that their analysts think the insurance company will strongly consider a sale or reinsurance transaction on its runoff annuities block.
"We think that Allstate may benefit the most from the growing supply of reinsurance capital," analysts noted.
The primary home business is a scale business with distribution related barriers to entry, which is where Allstate adds value, and not as a capital provider, the firm added.
"We don't view Allstate's peers as rate adequate, which we think will be supportive of home pricing in the medium term," Credit Suisse said.
In addition, the analysts estimate that two-thirds of the home capital supports catastrophe risk, and that the company could benefit by ceding to the reinsurance market and by reducing its underwriting results volatility.
Analysts anticipate 2015 and 2016 fiscal year earnings of $5.58 and $6.14 per share, respectively.
Separately, TheStreet Ratings team rates ALLSTATE CORP as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:
"We rate ALLSTATE CORP (ALL) 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 revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, increase in net income and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
You can view the full analysis from the report here: ALL Ratings Report