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Investing.com - BMO Capital raised its price target on Corebridge Financial (NYSE:CRBG) to $44.00 from $43.00 on Friday, while maintaining an Outperform rating on the stock. The company, currently valued at $19.24 billion, is trading near its 52-week high of $35.50, with a P/E ratio of 28.32x.
The price target increase follows Corebridge’s announcement of a variable annuity (VA) risk transfer, which BMO Capital believes strengthens the company’s free cash flow stability, a factor it considers underappreciated by the market. According to InvestingPro, management has been aggressively buying back shares, supporting shareholder value.
BMO Capital noted that the estimated net transaction multiple of approximately 7x suggests earnings per share accretion by 2027 once proceeds are fully deployed into share buybacks, potentially supporting an upward stock re-rating.
The firm highlighted that variable annuity-focused peers currently trade at less than 5x forward price-to-earnings multiples, suggesting room for valuation improvement for Corebridge Financial.
BMO Capital estimates that Corebridge currently generates approximately 9% free cash flow yield with relatively limited volatility, and has introduced 2027 EPS estimates that are 5% above current consensus expectations.
In other recent news, Corebridge Financial has announced a significant transaction to reinsure its entire variable annuity portfolio, valued at $51 billion, with Venerable, a subsidiary of Apollo. This $2.8 billion deal is expected to generate approximately $2.1 billion in distributable proceeds after tax, with plans to use these funds primarily for share repurchases. The company’s Board of Directors has approved a $2 billion increase to its share repurchase program in connection with the deal. Barclays (LON:BARC) has raised its price target for Corebridge Financial to $45, maintaining an Overweight rating, while Evercore ISI has increased its target to $39 with an Outperform rating. Both firms highlight the transaction’s potential to improve Corebridge’s valuation multiple and financial flexibility. The deal is anticipated to close in the second half of 2025, with Corebridge continuing to administer and service the divested policies. Corebridge’s adjusted after-tax operating income is expected to decrease by approximately $300 million in 2026, though the impact is projected to lessen over time. The company will continue to offer other annuity products and maintain its diversified business model.
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