Analysts Are Bullish on Top Financial Picks

By Carrie Williams

There’s a lot to be optimistic about in the Financial sector as 3 analysts just weighed in on Allstate (NYSE: ALL), First Republic Bank (NYSE: FRC) and Ares Capital (NASDAQ: ARCC) with bullish sentiments.

Allstate (NYSE: ALL)

In a report released yesterday, Sarah Dewitt from J.P. Morgan reiterated a Buy rating on Allstate (NYSE: ALL), with a price target of $80. The company’s shares opened today at $67.97.

Dewitt said:

“ALL reported strong 3Q results which reflected continued progress improving underlying auto insurance margins as it raises prices. Stronger than expected Property-Liability results in 3Q were partially offset by lower than expected Life earnings and a higher than projected loss in discontinued lines. ALL Brand auto insurance underlying margin improved y/y for the first time in 7 qtrs as the benefit of price increases more than offset higher loss costs, while homeowner’s underlying margins remained strong. Auto insurance loss frequency continues to rise, but at a slower pace in a positive trend. We rate ALL OW because it is one of the few insurers benefitting from price increases, and we view it as a turnaround. We expect auto margins to improve further as rate increases earn in.”

According to TipRanks.com, Dewitt is a 4-star analyst with an average return of 6.7% and a 68.1% success rate. Dewitt covers the Financial sector, focusing on stocks such as Montpelier Re Holdings Ltd, Renaissancere Holdings Ltd, and Arthur J. Gallagher & Co.

Allstate has an analyst consensus of Strong Buy, with a price target consensus of $79.33.

First Republic Bank (NYSE: FRC)

In a report released today, Steven Alexopoulos from J.P. Morgan reiterated a Buy rating on First Republic Bank (NYSE: FRC), with a price target of $90. The company’s shares opened today at $73.65.

Alexopoulos said:

“We attended First Republic’s inaugural investor day. Overall, the two day event was emblematic of just how different the company is versus the typical bank with the investor day focusing on the culture of the bank, high touch service model, deep bench, and long-term opportunity for outsized growth. While several questions posed during the event focused on FRC’s ability to improve upon the efficiency ratio, we take the near opposite view and see the low 60% efficiency ratio as precisely the reason the company is positioned to deliver double digit EPS as well as TBV growth, as this level of efficiency represents (1) a significant level of growth seeds being planted as well as (2) the less efficient (but higher ROE) wealth management business representing more of the earnings pie. In fact, with First Republic recently delivering a step up in the growth rate of loan originations, deposit growth, and wealth management assets, post the investor day we see a higher likelihood that these elevated growth rates are sustained over the intermediate terms. While some look at the premium valuation and think the opportunity in FRC stock has sailed, post the investor day we see multiple growth levers for the company to pull as the fruit from prior investments in the private bank, business bank, and wealth management business are harvested with each likely to drive further multiple expansion.”

Alexopoulos has an average return of 8.2% when recommending First Republic Bank.

According to TipRanks.com, Alexopoulos is ranked #853 out of 4165 analysts.

First Republic Bank has an analyst consensus of Moderate Buy, with a price target consensus of $82.83.

Ares Capital (NASDAQ: ARCC)

J.P. Morgan analyst Richard Shane reiterated a Buy rating on Ares Capital (NASDAQ: ARCC) today and set a price target of $17. The company’s shares opened today at $15.19.

Shane observed:

“ARCC reported core EPS of $0.43, beating JPMe and consensus ($0.38 and $0.39, respectively). GAAP EPS missed our expectations as fair value marks were lower than expected. However, investors were focused on the strong core EPS and investment income upside. Shares closed +0.5% (vs. -0.7% for the S&P 500).”

According to TipRanks.com, Shane is a 4-star analyst with an average return of 5.4% and a 67.6% success rate. Shane covers the Financial sector, focusing on stocks such as Pennantpark Investment Corp., BlackRock Capital Investment, and Discover Financial Services.

Currently, the analyst consensus on Ares Capital is Strong Buy and the average price target is $17, representing an 11.9% upside.

In a report issued on October 21, Jefferies also maintained a Buy rating on the stock with a $17.50 price target.