RBC Capital lifts CNO Financial price target to $45 from $40

On Monday, RBC Capital Markets updated its outlook on CNO Financial Group (NYSE:CNO), raising the stock’s price target from $40.00 to $45.00 while maintaining an Outperform rating. The stock currently trades at $41.31, near its 52-week high of $41.54, reflecting strong momentum with a 54% return over the past year. According to InvestingPro analysis, CNO’s current price aligns closely with its calculated Fair Value, suggesting balanced valuation. The revision follows a strong performance by the company, with RBC Capital Markets analyst Scott Heleniak highlighting a successful end to the year and a proactive approach to capital return.

CNO Financial Group reported impressive quarterly results, surpassing expectations with robust segment performance. The company experienced significant top-line growth in both of its operating channels, attributed to an increase in agent numbers, the introduction of new products, geographic expansion, and progress in its Worksite business. InvestingPro data reveals that CNO maintains a healthy financial position with a GOOD overall Financial Health Score, supported by strong profitability metrics and consistent dividend growth over 13 consecutive years.

The firm also benefited from a strong net investment income (NII), driven by higher new money yields, a rise in invested asset balances, and variable investment income (VII). Heleniak noted these factors as key strengths for CNO Financial. Trading at an attractive P/E ratio of 10.72, CNO demonstrates solid fundamentals with a gross profit margin of 41% and revenue growth of 7.3% in the last twelve months.

Looking ahead, CNO Financial has set a conservative yet achievable initial earnings per share (EPS) guidance for 2025. The company aims to improve its return on equity (ROE) by 150 basis points over the next three years, building on a 10% normalized rate. Progress towards this goal has already been observed.

RBC Capital’s continued Outperform rating is based on the firm’s confidence in CNO Financial’s strategic initiatives and its potential for sustained growth and capital returns. The raised price target reflects the analyst’s optimism about the company’s future performance and value creation for shareholders.

In other recent news, CNO Financial Group has been maintaining a strong position in the market, with Piper Sandler affirming an Overweight rating and a steady price target of $42.00. This assessment is based on several recent developments that strengthen the investment case for the insurance company. One key development is the conclusion of long-term care reinsurance transactions, which highlights the growing attractiveness of this kind of liability.

CNO Financial, nearly a year after the creation of CNO Bermuda, is believed to be considering additional strategic actions. The company’s cost structure is also expected to improve due to recent initiatives. Notably, the firm’s extensive distribution network, driven by robust recruitment trends, is another positive factor.

Piper Sandler also noted that CNO Financial’s valuation continues to be attractive, particularly in the life insurance sector, which is undergoing consolidation and demonstrating increased interest in owned distribution channels. These elements add to the scarcity value that CNO Financial could potentially benefit from. These are the recent developments that have been influencing the company’s standing in the market.

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