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On Friday, Keefe, Bruyette & Woods analyst Ryan Krueger increased the price target for Unum Group (NYSE:UNM) shares to $103, up from the previous $90, while maintaining an Outperform rating. Krueger’s decision follows Unum’s first long-term care (LTC) risk transfer deal, which was secured at a favorable price. This move, combined with the release of $0.6 billion from New York LTC reserves through internal reinsurance, prompted the upward revision of the price target.
The analyst believes that the transaction has added incremental value to Unum Group. In his evaluation, Krueger continues to value Unum’s employee benefits business at 12 times the estimated 2026 earnings per share (EPS), which equates to $107 per share. He has now adjusted the remaining negative LTC value assumption to approximately $2 billion, based on around 15% of reserves, which reduces the value by $12 per share. Additionally, he attributes a 50% credit to the roughly $2.5 billion of excess capital, translating into $1.25 billion, or $8 per share. With a current P/E ratio of 8.61 and a market capitalization of $13.8 billion, InvestingPro analysis suggests the stock is trading above its Fair Value. For deeper insights into Unum’s valuation metrics and 12+ additional ProTips, consider accessing the comprehensive Pro Research Report.
Krueger also made slight adjustments to the company’s future earnings estimates. The estimated EPS for 2025 and 2026 has been slightly reduced to $8.95 and $9.65, respectively, down from the previous forecasts of $9.10 and $9.70. These changes reflect the impact of the LTC transaction, although they are partly offset by the assumption of increased share buybacks.
Unum Group’s positive developments in its LTC business and the strategic management of its capital reserves have led Keefe, Bruyette & Woods to reaffirm their positive outlook on the company’s stock. The updated price target reflects the analyst’s confidence in Unum’s ongoing business strategy and potential for shareholder value creation.
In other recent news, Unum Group reported fourth-quarter earnings that fell short of analyst expectations, with adjusted earnings per share at $2.03 compared to the anticipated $2.14. The company also reported revenue of $3.24 billion, missing the forecasted $3.29 billion. Despite the earnings miss, Unum’s premium income increased by 3.1% year-over-year to $2.63 billion, and net investment income rose by 2.4% to $543.6 million. Additionally, the Colonial Life segment experienced a 39.7% increase in adjusted operating income, reaching $122.7 million.
In another development, Unum Group announced a $1 billion stock buyback program set to begin in April 2025, following the termination of its current program at the end of March 2025. Truist Securities recently raised its price target for Unum Group to $90 from $75, maintaining a Buy rating based on revised earnings per share projections and expectations of continued revenue growth. The firm’s analysts project Unum Group’s earnings per share to reach $9.20 in 2025 and $10.00 in 2026. These developments reflect ongoing confidence in Unum Group’s financial performance and market position.
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