Delphi Financial shares jump as estimates raised

Shares of Delphi Financial Group Inc., which underwrites employee benefits, rose Thursday after a KeyBanc Capital Markets analyst raised her profit estimates and price target on the stock, noting the company's successful buyback program.

Shares jumped $1.37, or 4.9 percent, to $29.20. Shares have traded between $22.26 and $47.79 in the past 12 months.

Year to date, the company has repurchased about 1.5 million shares, and expanded its buyback program by an additional 1 million shares at the beginning of this month. KeyBanc analyst Elizabeth Malone estimates that the share repurchases have added about 7 cents per share to 2008 earnings.

Malone subsequently raised her 2008 profit estimate to $3.02 per share from $2.95 per share, and her 2009 estimate to $3.47 from $3.40 per share.

Analysts polled by Thomson Financial, on average, estimate 2008 earnings of $3.06 per share and 2009 earnings of $3.75 per share.

Last month, Delphi lowered its full-year profit outlook to a range of $3 to $3.30 per share, from a previous forecast of between $3.45 and $3.60 per share.

Malone also raised her target price on the stock to $33 from $28.

The higher valuation is justified given that the company has executed on its promise to improve earnings through share repurchases, Malone said.

In April, the Wilmington, Del.-based company said its first-quarter profit missed Wall Street's estimates on lower investment income due to poor performance in a portion of its investment portfolio.

"We believe Delphi's results will improve over the first-quarter 2008 performance as the company reduces volatility in the investment portfolio, and overall returns in Delphi's invested assets become more predictable," Malone wrote in a note to clients Thursday.