Salomon Upgrades Amerus to 'Outperform'

Lisa Fasano thinks the life insurer's stock price can climb, led by its stable fundamentals and solid capital base

Salomon Smith Barney upgraded Amerus Group (AMH ) to outperform from in-line.

On Friday the life insurance company posted 92 cents fourth quarter earnings per share (excluding items). Analyst Lisa Fasano says she considers Amerus to be the best small-cap idea. She upgraded on increased comfort with the company's stable fundamentals, attractive valuation, solid capital base, and appealing business franchise. She notes Ameurs has grown into a top 15-ranked writer of fixed life insurance, and a top 10-ranked writer of fixed annuities (both based on sales). At the current valuation, she views the stock as compelling.

Fasano says her $34 target, at 8.9 times the esimated 2003 earnings per share, represents a 29% potential upside. She notes fourth quarter earnings per share is in line with her estimate.

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