trending Market Intelligence /marketintelligence/en/news-insights/trending/OBL6mf7JkanDAAiuaqAHcQ2 content esgSubNav
In This List

Raymond James upgrades Kemper on strong underwriting initiatives in auto biz


Anticipate the Unknown: Does Supply Chain Disruption Lead to Increased Credit Risk?


Data Stories: Data insights to help alleviate business complexity amid geopolitical risks


Expand Your Perspective: Data & Distribution Q&A


Street Talk | Episode 90: Banks should not wait on the Fed to put cash to work

Raymond James upgrades Kemper on strong underwriting initiatives in auto biz

Raymond James equity analyst Gregory Peters upgraded Kemper Corp. from "market perform" to "strong buy" following management's pricing, re-underwriting and claims initiatives in its nonstandard auto business.

Peters wrote in a research note that the company's nonstandard auto business has "started to turn" thanks to those plans.

Kemper reported second-quarter consolidated net operating income of $21.0 million, or 41 cents per share, an increase from $4.6 million, or 9 cents per share, in the year-ago quarter.

Second-quarter net income jumped $36.6 million, or 71 cents per share, compared with $4.0 million, or 8 cents per share, in the prior-year period.

In addition, Peters wrote, management has been continuing to improve the company's preferred auto business. "On a consolidated basis, we believe the combination of the positive pricing environment in personal auto and management's strategic initiatives should position the company to report a gradually improving [return on equity] through 2019," Peters wrote.

He maintained that that if the company closes in on a 10% return on equity, it could represent annualized operating EPS of up to $4 or more, which "represents considerable upside potential relative to near-term expectations."

Peters wrote that his firm is raising its 2017 and 2018 non-GAAP EPS estimates to $1.60 and $2.50, respectively, from $1.10 and $2.30 previously, reflecting recent results and anticipated improvements in the nonstandard business. He raised the price target for the company to $55.