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Sandler O'Neill upgrades FGL Holdings on stock weakness, business fundamentals

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Sandler O'Neill upgrades FGL Holdings on stock weakness, business fundamentals

Sandler O'Neill analyst John Barnidge raised FGL Holdings to "buy" on weakness in the company's shares and the underlying strength of the company.

He considers the stock's current valuation attractive, as the company's shares have fallen almost 10% in 2018 and about 25% since its 52-week high in June 2017. Barnidge noted that FGL Holdings is the worst performer in Sandler O'Neill's life insurance coverage in 2018.

He wrote that FGL Holdings is best positioned in the fixed index annuity market to be an acquirer after Apollo Global Management LLC and Athene Holding Ltd. got involved in the transaction for Voya Financial Inc.'s closed block variable annuity segment.

This removed a competitive buyer from the market in a meaningful way for possibly all of 2018, assuming the deal is closed by June 30, the analyst wrote. FGL Holdings has said it has $400 million of capital available for M&A, Barnidge wrote.

The analyst added that the company has a chance to beat its earnings estimates, which were made with a conservative approach.

Barnidge placed his 12-month price target for the company's shares at $10.00. His EPS estimates for the company are $1.02 for 2018 and $1.11 for 2019.