StanCorp Financial shares up on solid 1st-quarter results

Shares rose $1.93, or 3.9 percent, to $52.08 in afternoon trading. Shares have traded between $40.32 and $57.99 in the past 12 months.

Late Monday, the Portland, Ore.-based company said its profit rose 4 percent during the quarter as it collected more premiums and paid out less of those premiums in claims.

"The key takeaway was an overall solid quarter despite continued fears surrounding a recession and their commercial mortgage portfolio," Citi Investment Research analyst Keith F. Walsh wrote in a note to clients.

He said investors should not be afraid of the company's mortgage portfolio.

"StanCorp underwrites and services high-quality commercial mortgage loans to high net worth individuals," said Walsh, who reiterated a "Buy" rating on the shares and a target price of $55.

Over the long term, Walsh expects StanCorp to outperform its peers and the broader market due to above-average premium, sales and earnings growth, superior underwriting and pricing, solid levels of excess capital and a strong management team.

Lehman Brothers analyst Eric Berg, however, said he is concerned that growth at the company is slowing and that earnings could fall below long-term guidance of 12 percent to 15 percent annual growth.

"Given that StanCorp's level of new business production in its core group-insurance business is generating only about 7 percent premium growth, and given too that the company expects its claims experience to get modestly worse from here, we find it hard to understand how the company sustainably will report low-teens earnings-per-share growth," said Berg, who maintained an "Underweight" rating and $50 target price on the stock.