We are downgrading our recommendation on Hartford Financial Services Group (HIG) to Underperform based on its weak third quarter results. The results surpassed the Zacks Consensus Estimate but declined from the year-ago quarter, primarily due to poor operating performance, with most segments reporting net losses or reduced income.
Moreover, higher catastrophe losses coupled with decline in net investment income also contributed to the dismal performance. We remain concerned with the company's variable annuities and rate declines amid the volatile economy.
Our six-month target price of $16.00 per share equates to about 7.4x our earnings estimate for 2011. Combined with the $0.40 per share annual dividend, this target price implies an expected negative total return of 5.9% over that period. This is consistent with our Underperform recommendation on the shares.
HARTFORD FIN SV (HIG): Free Stock Analysis Report
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