High-risk play Lincoln National Corp.'s (NYSE: LNC) business model has stabilized, hence I'm Reiterating my Buy rating for the company's shares, first recommended on June 18, 2009 at a price of $15.92. If you bought LNC's shares in June, you're up an impressive 71%.A combination of a $2.1 billion stock offering, participation in the TARP program, and a stock market rise that has improved the capital position of LNC's variable annuity guarantees, has brightened the skies for Lincoln.
To be sure, FY2009 will likely feature lower fee income, due to lower average account balances, but the important point here is that Lincoln's core operations: 1) retirement plans and 2) insurance, have weathered the financial crisis. Prudent cost cuts add to the positive story. The First Call FY2009/FY2010 EPS estimates for LNC are $3.06 to $3.42.
Technically, LNC stock chart is strong, but it's slightly overbought, short-term. Hence, Buy LNC on a pull-back to $25-26. Keep in mind that shares may not retreat to that level.
Also, the Sell/Stop Loss has been revised to $14, or to just under the entry point, from $9.25
Stock Analysis: Lincoln Financial Corp. is a high-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 25% position in LNC now; then buy another 25% in one month, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 50% of your LNC position before December 2009. Revised Sell/Stop Loss if you bought shares in this company: $14.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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