Allstate Corp. Elevated to Top Pick by Morgan Stanley

Investing.com — Allstate Corp. (NYSE:ALL) has been elevated to a Top Pick at Morgan Stanley (NYSE:MS), as analysts forecast growth in auto policies and market share for 2025.

Morgan Stanley raised its price target on Allstate from $220 to $228, citing an improving competitive environment, enhanced retention, and strategic ad spending as key drivers of growth.

According to Morgan Stanley, Allstate's auto Policy-in-Force (PIF) will expand in 2025, supported by a "deceleration in rate filings" anticipated to improve retention.

The bank projects year-over-year (YoY) Auto PIF growth of approximately 3.8% for 2025 and 2% for 2026. The note emphasizes Allstate's strategic focus on advertising, which Morgan Stanley believes will drive new policy sign-ups.

Analysts predict that Allstate's ad spending will grow 172% in 2024 and another 22% in 2025, tapering by 8% in 2026.

This increase is expected to "support new policies in Q4 2024 and 2025," potentially leading to the addition of 7 million new policies in 2024 and 7.4 million in 2025.

Morgan Stanley also noted that the "renewal rate will increase due to pricing deceleration," with management estimating that a one-point increase in renewal rate could lead to an additional 350,000 auto policies.

The bank anticipates retention will improve by 1.5 points in 2025, adding 591,000 auto policies that year and 602,000 in 2026.

Morgan Stanley concludes that Allstate is positioned for "efficient growth opportunities," supported by a more stable pricing environment, effective advertising, and improved retention strategies, making it their top choice for 2025.