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Investing.com - Morgan Stanley (NYSE:MS) upgraded Globe Life (NYSE:GL) from Equalweight to Overweight on Tuesday, raising its price target to $166.00 from $135.00. The stock, currently trading at $139.34 and near its 52-week high of $144, has demonstrated strong momentum with a remarkable 58.59% return over the past year. According to InvestingPro data, analyst targets for the stock range from $135 to $188.
The upgrade follows the conclusion of Securities and Exchange Commission and Department of Justice investigations into the insurer’s sales practices, which Morgan Stanley believes removes significant uncertainty surrounding the company. Globe Life, with a market capitalization of $11.5 billion, has maintained strong fundamentals throughout this period, earning a "GREAT" financial health score from InvestingPro’s comprehensive analysis.
The investment bank noted that Globe Life’s average multiple has historically been consistently around 11x, with reliable earnings outperformances maintaining this valuation through various economic cycles including pre-financial crisis, post-financial crisis through COVID-19, and from 2021 through early 2024.
Morgan Stanley attributed the multiple contraction over the past approximately 18 months to the DOJ and SEC investigations on sales practices and uncertainties around the company’s Health segment earnings.
With these headwinds now removed, Morgan Stanley expects investor focus to shift back to Globe Life’s fundamentals and steady earnings growth, seeing a path for the company’s multiple to expand from the current 9.5x back to its historical 11.0x average.
In other recent news, Globe Life Inc. has experienced several significant developments. The U.S. Attorney’s Office for the Western District of Pennsylvania has concluded its investigation into the sales practices of Globe Life’s subsidiary, American Income Life, without any enforcement action. This resolution removes a major regulatory uncertainty for the company. Following this news, TD Cowen reaffirmed its Buy rating on Globe Life, maintaining a price target of $182. Similarly, Keefe, Bruyette & Woods raised its price target for Globe Life to $160 from $155, continuing to rate the stock as Outperform. In another positive development, BMO Capital increased its price target for Globe Life to $149, citing potential improvements in free cash flow and price-to-earnings metrics. These recent developments have provided clarity and positive momentum for Globe Life’s stock.
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