Sun Life stock target raised to C$95 at BMO Capital

On Monday, BMO Capital Markets adjusted its outlook on Sun Life Financial Inc . (NYSE:SLF:CN) (NYSE: SLF), increasing the price target to C$95, up from the previous C$89, while maintaining an Outperform rating on the company’s shares. The revised price target reflects a positive assessment of the company’s recent financial performance and an anticipation of continued earnings quality and visibility. According to InvestingPro data, Sun Life currently trades at a P/E ratio of 15.8x and has demonstrated strong momentum, trading near its 52-week high of $63.34. The company maintains a "GOOD" overall financial health score, suggesting solid fundamentals support the analyst’s positive outlook.

The price target adjustment is based on a higher earnings multiple, with the target for MFS/SLC’s 2026E underlying EPS being set at 13.5 times, up from the prior 13 times. For the rest of Sun Life Financial (TSX:SLF), the earnings multiple for 2026E has been raised to 11 times from 10 times. These changes underscore the analyst’s view of the company’s improving earnings quality and visibility. Based on comprehensive analysis available through InvestingPro, which offers detailed valuation metrics and 10+ additional ProTips for Sun Life, the stock appears to be trading above its Fair Value, with a PEG ratio of 4.31x indicating a premium relative to its growth rate.

Sun Life’s recent quarterly results were highlighted as a "good quality beat" by the analyst, noting that the company’s performance was strong even excluding various outsized items. Key factors contributing to the positive outlook include better investment flows at MFS, robust sales growth in Asia, improved performance in the U.S. Dental segment, and a substantial increase in dividends. The company has maintained dividend payments for 26 consecutive years, with a current yield of 4.07% and impressive dividend growth of 9.47% over the last twelve months. Additionally, the company saw significantly lower mark-to-market (MTM) hits that affect reported earnings.

The analyst has chosen to keep the go-forward estimates largely unchanged, despite the increase in target multiples. This conservative approach takes into account the current financial trends and the company’s operational strengths.

The higher price target and continued Outperform rating are indicative of BMO Capital Markets’ confidence in Sun Life Financial’s ability to maintain its premium valuation, driven by solid financial results and strategic business growth.

In other recent news, Sun Life Financial Inc. reported impressive financial results for the first quarter of 2025, with earnings per share (EPS) of $1.82, surpassing the forecasted $1.72. The company achieved a record underlying net income of $1,045 million, marking a 19% increase from the previous year. Sun Life also announced the renewal of its buyback program and a 5% increase in its common share dividend. The company maintained a strong capital position, with a Life Insurance (NSE:LIFI) Capital Adequacy Test (LICAT) ratio of 149%. Additionally, Sun Life expanded its digital offerings, launching new client portals and a mobile app in the Philippines.

In other developments, Sun Life confirmed the election of its board of directors, with Kevin D. Strain receiving the highest approval at 99.8% of votes cast in his favor. Analyst firms have not reported any recent upgrades or downgrades for Sun Life. The company continues to focus on its strategic growth areas, targeting a 12% medium-term growth in its U.S. business and expecting continued growth in alternatives and asset management. Despite geopolitical uncertainties and macroeconomic pressures, Sun Life remains confident in its business strategy and financial discipline.

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