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Research Alert: CFRA Keeps Buy Opinion On Shares Of American Financial Group, Inc.

· 02/05/2021 09:51

02:50 PM EST, 02/05/2021 (MT Newswires) -- CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows:

We raise our 12-month target price by $5 to $110, or 15.2x our 2021 operating EPS estimate of $7.25 (cut from $8.40 to reflect the sale of the annuity unit, but excluding the $7.11 to $7.91 a share gain we estimate AFG will post on this transaction) and 12.6x our 2022 operating EPS estimate of $8.70 (cut by $0.35) versus the shares' five-year average forward multiple of 12.6x and a peer average of 14x. Q4 operating EPS of $3.09 versus $2.22 topped our $2.04 EPS estimate and the $2.08 consensus forecast on an in-line 4.2% drop in operating revenues offset by 38% higher pretax underwriting profits. Full-year 2020 EPS of $8.44 versus $8.62 reflected 4.4% lower revenues but wider margins on 2.2% lower loss costs. We see 2021 as a transitional year as AFG sheds its annuity business and leverages opportunities for faster top-line growth amid a strong property-casualty market, evidenced by AFG's Q4 average rate increases of 13%. The shares also yield 3.5% (based on $3.45 of trailing 12-month dividend payments).