JMP Securities analyst Matthew Carletti has upgraded Kemper Corp. to "market outperform" from "market perform," writing that the stock's current valuation does not reflect expected EPS growth and return-on-equity expansion in 2019 and 2020.

Carletti said he believes that the Kemper management will be able to execute its turnaround strategy and successfully integrate the acquisition of Infinity Property and Casualty Corp. He said the acquisition has given Kemper top-tier positioning in the nonstandard auto market and noted that Infinity's emphasis on higher-growth Hispanic markets and a footprint in key nonstandard states has brought additional scale and efficiencies to the business.

Carletti also said Kemper needs to expand its "stellar" life business, which has strong cash flow and capital diversification benefits. He also noted the improving underwriting results of the company's preferred home and auto business.