Nucor earnings beat by $0.08, revenue fell short of estimates
Investing.com - Piper Sandler has raised its price target on Unum Group (NYSE:UNM) to $92.00 from $88.00 while maintaining an Overweight rating on the insurance company’s stock. The new target represents potential upside from the current price of $81.61, with the stock already showing impressive momentum, having delivered a 64.59% return over the past year. According to InvestingPro analysis, the company maintains a strong GOOD financial health score of 3.0 out of 4.0.
The firm cited several positive factors supporting the raised target, including Unum’s lower sensitivity to variable investment income (VII) headwinds that are affecting much of the life insurance sector. Less than 20% of Unum’s revenues come from net investment income, which positions the company more favorably than peers experiencing investment challenges. The company’s strong fundamentals are reflected in its attractive P/E ratio of 9.51 and solid return on equity of 15%. InvestingPro subscribers can access 10+ additional key insights about UNM’s financial performance and outlook.
Piper Sandler noted that the recent completion of Unum’s long-term care (LTC) block sale has created additional financial flexibility for the company while accelerating free cash flow conversion. The firm also expressed confidence that elevated group benefits utilization seen in short-term and long-term disability during the first quarter of 2025 would not impact Unum’s ability to achieve its targeted margins for the year.
The research firm identified the second quarter as typically being the second-heaviest quarter for distribution at Unum, with expectations that the company’s pipeline would convert successfully. Piper Sandler also pointed out that the first quarter of 2025 represented the high-water mark for expenses this year.
The analyst’s positive outlook comes despite reducing earnings per share estimates due to continued fee and spread headwinds, which were confirmed by a challenging pre-announcement of variable investment income from another company in the sector in late June.
In other recent news, Unum Group’s Q1 2025 earnings fell short of expectations, reporting an earnings per share (EPS) of $2.04 against the forecasted $2.18. The company’s revenue was $3.09 billion, missing the anticipated $3.34 billion. Despite these results, Unum maintained strong liquidity with $2.2 billion in holding company cash and demonstrated robust operational performance with a return on equity of over 20% for its core operations. In another development, Unum Group completed a significant reinsurance transaction with Fortitude Reinsurance Company Ltd. This deal involves a 100% quota share of a portion of Unum’s closed block individual long-term care business, representing $3.4 billion in statutory reserves, and a 100% quota share of the individual disability business reinsured by Unum from Provident Life and Accident Insurance Company, amounting to approximately $120 million in in-force premium. Furthermore, Unum Group appointed Shelia Anderson as Executive Vice President and Chief Information and Digital Officer, highlighting the company’s focus on digital transformation. The company expressed confidence in Anderson’s strategic vision to enhance customer and employee experiences through innovative technology solutions. Despite the Q1 earnings miss, Unum remains optimistic about future growth, projecting full-year sales growth between 5% and 10%.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.