Bullish indicating open at $55-$60, IPO prices at $37
Investing.com - Scotiabank (TSX:BNS) has resumed coverage of Sun Life Financial Inc. (TSX:SLF) (NYSE:SLF) with a Sector Perform rating and a price target of C$88.00, implying a total return of 7% including dividends. According to InvestingPro data, Sun Life has maintained dividend payments for 26 consecutive years and boasts a solid 4.2% dividend yield, demonstrating its commitment to shareholder returns.
The price target is based on a price-to-book value multiple of 1.9x on Scotiabank’s 2026 book value per share estimate, representing a 10% premium to the average multiple applied to Sun Life’s peer group, though below the company’s historical premium of 24%. Current InvestingPro metrics show the company trading at a P/B ratio of 2.01x and a P/E ratio of 15.4x, with the stock currently trading near its Fair Value.
Scotiabank highlighted several positives for Sun Life, including its higher exposure to a well-run Asset Management business, solid growth trajectory in the fast-growing Asia market, signs of improvement in the U.S. division, and a group-high return on equity.
Despite these strengths, the bank believes these positive factors are largely reflected in Sun Life’s current valuation multiple, which sits at the top of Scotiabank’s coverage universe on a price-to-book value basis.
Scotiabank suggested investors could generate more upside with exposure to other names within the insurance group over the next year.
In other recent news, Sun Life Financial Inc . reported impressive financial results for the first quarter of 2025, with earnings per share (EPS) reaching $1.82, surpassing analyst predictions of $1.72. This marks a 21% increase compared to the same period last year. Additionally, RBC Capital Markets raised its price target for Sun Life to Cdn$88, citing the company’s strong performance in various business segments, including notable improvements in the U.S. stop-loss and Dental segments. BMO Capital Markets also adjusted its price target for Sun Life to C$95, reflecting confidence in the company’s earnings quality and future visibility. The adjustment is based on an increased earnings multiple for Sun Life’s businesses, indicating positive analyst sentiment. In corporate governance news, Sun Life confirmed the election of its board of directors at its recent annual meeting, with all 12 nominees receiving majority support. Kevin D. Strain received the highest approval, with 99.8% of votes in his favor. These developments highlight Sun Life’s strong financial and operational performance, as well as continued confidence from financial analysts and shareholders.
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