Thursday, November 20, 2008

Lincoln National (NYSE:LNC): Encouraging comments from Barclays - Bounce?

Barclays has some interesting comments on Lincoln National (NYSE:LNC) following yesterday's investor-day presentation. Note the stock was down over 40% yesterday - yet, Barclays' comments seem pretty encouraging. Firm reits their Overweight rating and whopping $60 tgt on the name.

Firm notes they like Lincoln, despite the drop in its stock price: It’s being direct and blunt with investors.

Their view, in short, is that Lincoln’s public-relations strategy – and that is exactly what it is and needs to be, a public-relations strategy – is both apparent and intelligent. It is to be the first insurer to report on the negative impact of fourth-quarter developments on the theory, presumably, that the company that reports bad news early will suffer less of a hit to its stock
price over the long run than the company that drags out the process. More than being about first, however, the strategy seems to be out laying out the facts about Lincoln as comprehensively and with the least possible positive varnish that Lincoln can use. Management’s thinking would appear to be that if Lincoln focuses on the right issues (capital, liquidity and investments), sticks to the facts and doesn’t try to sugarcoat the problem or somehow try to persuade investors that there isn’t
a problem, that Lincoln will end up far better off than if Lincoln were to try to divert investors’ attention.

Barclays couldn’t agree more with this strategy: Being straight up with investors is absolutely the best strategy, in firm's view, even if over the short term it is costing Lincoln further reductions in its stock price. In fact, they’d say that while lots of what Fred Crawford, Lincoln’s CFO, and other senior financial executives at Lincoln, had to say yesterday was new, none of it should have come as a surprise.

Make no mistake: Lincoln is sailing through a bad, bad storm. But it is the same storm that others are smack in the middle of too. Firm believes the fact that Lincoln is addressing head on and in technical detail how it plans to handle the swells should be commended. Indeed it is precisely because Lincoln has acknowledged the issues and is talking to the world about how it is managing through them that leaves them thinking it will be among the survivors.

Notablecalls: Sounds pretty encouraging. I suspect we will get a bounce in the names (LNC, HIG, PRU, MET) today as a lot of the bad news has been discounted here. Rhymes with my market call.

1 comment:

bomersback said...

Were did you Barclay's referece come from?