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Investing.com - Morgan Stanley downgraded Corebridge Financial (NYSE:CRBG) from Overweight to Equalweight on Monday, while lowering its price target to $33.00 from $39.00. This aligns with InvestingPro data showing 8 analysts have recently revised their earnings expectations downward for the upcoming period, despite the company maintaining a perfect Piotroski Score of 9.
The downgrade follows Corebridge’s third-quarter 2025 results, which Morgan Stanley acknowledged outperformed consensus expectations on an underlying basis. Despite this positive performance, the investment bank expressed concerns about the company’s future outlook. According to InvestingPro data, Corebridge is currently trading near its Fair Value, with a P/E ratio of 16.36 and a 3.3% dividend yield.
Morgan Stanley cited two main factors for its more cautious stance, with spread compression being a primary concern. During Corebridge’s earnings call, management indicated that spread compression is expected to continue through the end of 2026, influenced by the latest outlook on interest rate cuts. This concern is reflected in the company’s relatively weak gross profit margin of 22.89% for the last twelve months.
The investment firm noted that while Corebridge has implemented measures to mitigate the impact of Federal Reserve rate cuts—including asset optimization and business growth—these actions only partially offset the effects. Despite these efforts, spread income declined by 1% despite 100 basis points of rate cuts in 2024.
Morgan Stanley expressed particular concern that spread income has become a greater percentage of Corebridge’s earnings profile, making the company more vulnerable to interest rate fluctuations despite its diversified income sources.
In other recent news, Corebridge Financial Inc. reported its third-quarter 2025 earnings, revealing a mixed performance. The company’s earnings per share (EPS) came in at $0.96, missing the anticipated $1.10 by 12.73%. However, Corebridge’s revenue exceeded expectations, reaching $5.63 billion compared to the forecasted $4.87 billion, marking a 15.61% beat. Additionally, American International Group (AIG) announced a secondary offering of Corebridge Financial shares, pricing them at $31.10 each. AIG, as the selling stockholder, offered 32.6 million existing shares, generating approximately $1.0 billion in gross proceeds. This offering represents a portion of AIG’s holdings in Corebridge, which has about 520 million total shares outstanding. All net proceeds from this offering will be directed to AIG. These developments highlight recent significant activities concerning Corebridge Financial.
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