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Sandler O'Neill initiates coverage of The Hartford at 'buy'


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Sandler O'Neill initiates coverage of The Hartford at 'buy'

Sandler O'Neill & Partners analyst Paul Newsome started coverage of The Hartford Financial Services Group Inc. with a "buy" rating.

He wrote that valuation of the company's stock is "relatively attractive," trading at 9.9x forward earnings versus the peer average of 12.6x. The stock trades at 142% of book value, compared to the peer average of 150%.

The Hartford's pending acquisition of Navigators Group Inc. addressed investors' concern that proceeds from the Talcott divestment will be used poorly, Newsome wrote. He believes that the Navigators purchase would generate numerous benefits, such as enhanced net investment income and reduced use of reinsurance, for The Hartford.

Newsome also expects the acquisition of Aetna Inc.'s benefits business to create opportunities for earnings growth.

He introduced a $60 price target. His EPS estimates are $4.70 for 2018 and $5.00 for 2019.