The financial analyst who first raised concerns about Aflac’s investment portfolio has now upgraded the stock.
Morgan Stanley’s Nigel Dally upgraded the Columbus-based supplemental insurance company to “overweight” from “underweight.”
What the recommendation did was take the stock to a “buy”.
“Absent a capital offering, we believe the stock price could more than double,” Dally wrote.
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Dally said he recommended the upgrade because Aflac will likely not have to raise capital — sell shares — to cover investment losses.
Friday when the Dow Jones Industrial Average and the Nasdaq fell, Aflac rose more than 4 percent. It closed up 69 cents at $17.01 per share.
That is well below where it was earlier this year,
Last month, Dally raised concerns about Aflac’s investments in some European banks. It set off a storm that saw the company’s stock lose nearly half of its value.
But the real trouble started Jan. 22 when Dally reported that more than $8 billion of the firm’s investments in European bank securities could be at risk if the banks were taken over by their governments. The stock fell 37 percent, or more than $13 per share, that day alone. It fell another 20 percent two trading days later.
The decline in stock value came despite the fact that Aflac, which sells insurance policies in the U.S. and Japan, reported earnings of more than $1.3 billion in 2008.