) to buy from hold.
Analyst Vanessa Wilson says the stock is down 35% year-to-date, shares are trading at book value and the company is offering a 2% dividend yield. She thinks Nationwide offers compelling value to mid-cap fund managers. Wilson says the $35 target implies 36% upside from current levels. She notes with sustainable return-on-equity of 11% to 12%, a price-to-book valuation of 1.2 is appropriate for this franchise.
Wilson maintains her $3.20 2002 earnings per share estimate; she cut her $3.55 2003 estimate to $3.25 to address a third-quarter stock market decline and her expectations of lower margins in 2003. She says there's a risk that consensus estimates remain 2% to 4% too high for 2002, and 9% too high for 2003.