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On Monday, Raymond (NSE:RYMD) James analysts maintained an Outperform rating for Service Corp. Intl. stock (NYSE: SCI), with a price target of $85.00, representing potential upside from the current price of $77.60. According to InvestingPro data, the company has maintained dividend payments for 21 consecutive years, demonstrating strong financial stability. The decision comes as the analysts refine their calculations regarding the company’s insurance transition.
The analysts highlighted that the transition is expected to result in a $0.16 benefit to the company’s earnings per share (EPS) for 2025. Over time, the total EPS benefit is now estimated to be $0.66, an increase from the previous estimate of $0.49. This adjustment is attributed to revised calculations concerning salesperson commissions. With a current P/E ratio of 21.16 and analysts forecasting EPS of $3.80 for 2025, InvestingPro analysis suggests the stock is trading above its Fair Value.
During the first quarter, the transition’s benefit was approximately $1.5 million. This figure reflects an increase in general agency commissions by $8.4 million year-over-year, offset by a decrease in recognized urn revenue of $6.9 million year-over-year.
Raymond James analysts noted that the full-year benefit of the transition is likely to be more significant in the latter half of the year. The firm continues to monitor the situation closely as the transition progresses.
In other recent news, Service Corporation International (NYSE:SCI) reported its first-quarter 2025 earnings, exceeding analysts’ expectations with an adjusted earnings per share (EPS) of $0.96, compared to the forecasted $0.93. The company’s revenue aligned with projections, coming in at $1.07 billion. Despite these positive financial results, the company’s stock experienced a decline of 4.88% in after-hours trading. Analysts have noted that the funeral volume is expected to remain flat to slightly down in 2025, which may contribute to investor caution. SCI confirmed its full-year EPS guidance range of $3.70 to $4.00, indicating a potential growth of 9% year-over-year. The company also reported a significant increase in adjusted operating cash flow, which rose by $90 million to $316 million. Analysts from Oppenheimer and UBS have been actively engaging with SCI’s management, particularly interested in the company’s transition to an insurance-funded preneed model and its implications for future sales. Additionally, SCI’s strategic focus on enhancing its sales process and lead management through technology development has been highlighted as a factor contributing to its robust performance.
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