Fannie Mae, Freddie Mac shares tumble after conservatorship comments
On Thursday, Brighthouse Financial , Inc. (NASDAQ:BHF) stock saw its price target increased by Morgan Stanley (NYSE:MS) from $33.00 to $36.00, although the firm maintained its Underweight rating on the company’s shares. The adjustment comes as a response to improved projections for incoming loan losses and the company’s strategic share repurchases. According to InvestingPro data, the stock currently trades at $53.33, with analysis suggesting the shares are undervalued based on their Fair Value assessment.
Morgan Stanley analysts acknowledged the positive impact of these factors on Brighthouse Financial’s earnings per share estimates for the years 2025 and 2026. The company’s financial metrics support this outlook, with InvestingPro data showing a strong revenue growth of 40.7% in the last twelve months and an attractive P/E ratio of 11.45. Despite the revisions leading to a higher price target, the analysts have expressed continued caution regarding the company’s outlook. Their concerns stem from the current macroeconomic and tariff uncertainties, as well as a modest increase in unemployment rates, which they believe could affect credit card net charge-offs (NCOs) in the subprime and retail sectors.
The analysts’ statement highlighted the steps Brighthouse Financial has taken to bolster its financial performance, noting, "Better incoming loan losses + opportunistic share repurchases take our 2025/26e EPS higher." This aligns with InvestingPro insights, which indicate management has been aggressively buying back shares, with net income expected to grow this year. However, the cautionary stance is reflected in the Underweight rating, suggesting that Morgan Stanley’s outlook for Brighthouse Financial remains conservative in light of potential economic headwinds. Discover 6 additional exclusive ProTips and comprehensive financial analysis by subscribing to InvestingPro.
While the raised price target indicates a slightly more optimistic view of Brighthouse Financial’s value, the Underweight rating implies that the analysts advise investors to maintain lower investment levels in the company’s stock compared to other stocks in the portfolio. This rating is due to the anticipated challenges the company may face, which could impact its financial health and stock performance.
Brighthouse Financial’s management and shareholders will likely take note of these insights as they continue to navigate the evolving economic landscape. The company’s stock performance and future rating adjustments will depend on how effectively it manages the risks and opportunities ahead.
In other recent news, Brighthouse Financial reported fourth-quarter earnings that exceeded analyst expectations, with adjusted earnings per share reaching $5.88, surpassing the consensus estimate of $4.50. The company generated $1.2 billion in revenue for the quarter, although this figure may not align directly with analyst projections of $2.2 billion. Net income available to shareholders was reported at $646 million, or $10.79 per diluted share, a significant turnaround from a net loss of $942 million in the previous year. Annuity sales saw an 18% decline year-over-year, primarily due to reduced sales of fixed deferred annuities, though this was partly offset by strong sales of Shield Level Annuities. Brighthouse Financial completed a reinsurance transaction for a legacy block of universal life and variable universal life products, as part of its capital-focused strategic initiatives.
In other developments, Raymond (NSE:RYMD) James upgraded Brighthouse Financial’s stock rating from Market Perform to Strong Buy, setting a price target of $72.00. This upgrade follows speculation about a potential sale of the company, which analysts believe could unlock significant value for shareholders. Raymond James has also updated its earnings per share estimates for Brighthouse Financial for the years 2025, 2026, and 2027 to $20.77, $23.54, and $27.25, respectively. These figures reflect adjustments following the fourth quarter of 2024 and are favorable compared to consensus estimates. Additionally, Brighthouse Financial repurchased $60 million of its common stock in the fourth quarter, reducing shares outstanding by approximately 8% compared to the end of 2023.
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