Why Globe Life Stock Was a Winner Today

Key Points

• An analyst upgraded her recommendation on the stock.

• She now feels it's a buy.

• 10 stocks we like better than Globe Life ›

Insurance conglomerate Globe Life (NYSE: GL) was a safe bet of a stock on Friday, as investors snapped it up following a bullish analyst move. With that tailwind at its back, Globe Life closed the day nearly 3% higher in price, easily beating the 0.4% increase of the S&P 500 index.

CFRA now feels the stock is a buy

That move was made by CFRA analyst Catherine Seifert, who upgraded her Globe Life recommendation to buy from her previous hold. She accompanied this with a significant price-target increase to $155 per share from the preceding $130.

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According to reports, Seifert's change was due to two recent developments -- the second-quarter results Globe Life posted on Wednesday and the resolution of a Securities and Exchange Commission (SEC) investigation.

The probe, which concluded on Thursday with the SEC electing not to recommend enforcement action against the company, concerned allegations from short seller reports alleging fraud at both the company and its subsidiary, American Income Life.

As for the Q2 earnings, the analyst was cheered by management providing encouraging guidance on anticipated reserve releases in its current Q3 and in the following frame. She also waxed optimistic about the development of underwriting in certain categories, such as mortality.

A solid second quarter

Those earnings, published on Wednesday, were encouraging in many respects. Globe Life managed to boost its revenue by nearly 3% year over year to $1.48 billion. Although net income was down slightly (by 2%), it beat the consensus analyst estimate. Put another way, it's business as usual for the insurer, and in that rather conservative industry, that's a heartening development.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.