Raymond James has reiterated its Strong Buy recommendation on Allstate (ALL) and left its price target at $260.00, citing expectations that the insurer's earnings profile will remain durable even as the property and casualty insurance rate cycle softens. The firm's assessment incorporates valuation data indicating a low multiple for the stock - a P/E ratio of 5.65 - which the analyst team views as suggestive of potential undervaluation versus sector peers.
The positive stance from Raymond James rests on several pillars: Allstate's selective and disciplined pricing actions, ongoing expense-efficiency gains, and the company's multi-year Transformative Growth initiative. These operational elements are seen as offsets to pressure on underwriting margins as pricing normalization progresses.
Market reaction to Allstate's performance has been muted since the company released fourth-quarter 2025 results that outpaced Raymond James' estimates. The quarter delivered better-than-expected combined ratio outcomes and higher net investment income, and management announced a new $4.0 billion share repurchase authorization. Allstate's market capitalization stands at roughly $54 billion and the company reported a return on equity of 42%, underscoring robust profitability metrics in the firm's view.
Operationally, Allstate reported notable underwriting results for 2025, achieving a full-year combined ratio of 85%. Management has reiterated guidance that margins will normalize over time as prior pricing actions unwind and affordability measures broaden, targeting combined ratios in the mid-90s for auto insurance and the low-90s for homeowners insurance.
Dividend metrics are also highlighted by third-party data: Allstate has paid dividends for 34 consecutive years, carries a current dividend yield of 2.08%, and recently recorded dividend growth of 17.39%. InvestingPro flags more than ten additional tips related to Allstate's financial condition and outlook and assigns the company an overall financial-health rating of "GREAT" with a score of 3.56.
On price actions, Allstate has implemented selective rate reductions principally within its Allstate Standard Coverage (ASC) business. Those adjustments included average auto rate decreases of approximately 9% across 32 states, producing an estimated $810 million of cumulative earned premium impact in 2025. Raymond James notes that such rate changes typically take 12-18 months to fully work through the book of business, implying a gradual path to normalization.
Despite the selective rate decreases, Allstate sustained revenue growth of 5.58% over the most recent twelve-month period. The firm also emphasizes that the Transformative Growth programs have produced meaningful expense leverage: Allstate has reduced its adjusted expense ratio by about 6.6 percentage points since 2018, driven by improvements in claims handling, more sophisticated pricing, and operating efficiencies.
Allstate's fourth-quarter earnings results were particularly strong versus analyst expectations. The insurer reported adjusted earnings per share of $14.31, beating the consensus estimate of $9.60 by $4.71. Quarterly revenue came in at $17.3 billion, slightly above the $17.24 billion estimate and representing a 5.1% increase year over year. Raymond James and other analysts are expected to factor these results into subsequent evaluations of the company.
What this means for investors and markets
The combination of underwriting outperformance, investment income improvement, expense reductions tied to the Transformative Growth initiative, and a sizable share repurchase program form the basis for Raymond James' continued bullish stance. The firm's view is that these elements can help offset margin headwinds as premium rate actions moderate.
Data and valuation note: The price target and recommendation reflect Raymond James' assessment that Allstate's current P/E of 5.65 may not fully reflect the company's earnings durability and capital actions.