2023-03-20 11:03:50 ET
Unum Group ( NYSE: UNM ) stock drove up 6.3% in Monday morning trading after Jefferies analyst upgraded shares of the life insurer to Buy from Hold as its absolute and relative price-to-earnings ratios stand below historical averages, analyst Suneet Kamath wrote in a note to clients.
While the stock climbed nearly 70% in 2022, UNM's forward P/E ratio was sitting at only 5.43x at the time of writing.
The upbeat coverage comes at a time when the banking crisis raises questions about the potential for liquidity pressures on the broader life insurance space, Kamath explained, while noting that such an event is unlikely to occur.
It's a low probability event particularly because of "1) the diversified nature of the sector's business mix; 2) complexity associated with accessing cash values (i.e., inertia); 3) surrender charges); and 4) the ongoing need for products / protection," the note said.
For Unum ( UNM ), Kamath pointed out that its "core business is performing well" and "it has one of the strongest excess capital positions" in the industry.
And he expects UNM to see more sources of EPS upside such as stronger revenue growth. Buoyed by higher premiums across its core segments, Unum's ( UNM ) Q4 after-tax adjusted operating income of $1.43 per share jumped from $0.89 in the year-ago quarter.
At the end of January, SA contributor Aristofanis Papadatos flagged UNM as a Buy given its P/E ratio of just 6.7x at the time.
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Unum Group stock gaps up after upgrade to Buy at Jefferies