Hold -- Price 12.25 on March 17
by Wunderlich Securities

We forecast operating EPS will recover to $3.05 in 2009 versus $1.93 in 2008. We expect 2010 operating EPS will rise 15%, to $3.50. Book value is expected to rise 14% in 2009 to $21.06 compared to $18.41 in 2008 and increase 15% in 2010 to $24.15. We anticipate [return on equity] will recover to 15.4% in 2009 and 15.5% in 2010 from 9.2% in 2008. We're establishing a 15 target, which is 22% above the current price. We believe Delphi's volatile history of EPS performance and lack of visibility on achieving stable results limits the target valuation to 70% of forecast book value and 4.6 times 2009 EPS. The target valuation is close to peers, which are trading at 4.7 times 2009 EPS and 60% of 2009 forecast book value. Delphi is an excellent operational manager...but its investment strategy has created a high level of unpredictability...The restructuring of the investment portfolio is expected to improve stability but also reduce returns....We believe Delphi shares could remain under pressure if earnings fall below company guidance as our estimates and Street consensus predict. Consensus [EPS] estimates are below guidance at $2.98. Market cap: $522 million.

Buy - Price 27.47 on May 27
by Sandler O'Neill

We're establishing an '08 operating earnings estimate of $2.98 a share and $3.80 a share for '09, versus consensus $3.07 and $3.74...respectively. We don't believe the net-investment-income shortfall [seen] in 1Q08 -- due to underperformance of limited-investment partnerships -- is likely to repeat. And the shares look inexpensive. Our Buy rating is principally a valuation call; DFG's trading at 9.2 times our '08 earnings estimate of $2.98, compared with their five-year average multiple of 12.1 times. Target: 34. Market cap: $1.3 billion

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