On Thursday, Piper Sandler adjusted its outlook on Voya Financial (NYSE:NYSE:VOYA) shares, increasing the price target to $91.00 from the previous $88.00 while sustaining an Overweight rating on the company's stock. The firm's decision comes in light of recent challenges faced by Voya's Health Solutions sector, which experienced worse-than-expected headwinds, leading to substantial pricing adjustments.
The analyst from Piper Sandler highlighted that the third quarter of 2024 was particularly tough for Voya Financial due to a 5% deterioration in the loss ratio for policy years in 2024. This negative development in Health Solutions overshadowed the strong performance seen in the Wealth Solutions and Investment Management divisions. Despite the setbacks, the analyst remains optimistic about the company's future prospects.
Voya's Investment Management sector has shown a notable turnaround this year, according to the analyst. The Wealth Solutions pipeline is also expected to convert significantly, as indicated by the anticipated level of net flows in the fourth quarter of 2024.
This positive outlook is further supported by Voya's shares being considered among the most attractively valued within Piper Sandler's coverage, with a particular strength in fee-related earnings.
The new price target of $91 reflects a 9.4 times multiple of the estimated 2025 earnings, an increase from the previous 8.8 times multiple. This upward revision is also influenced by higher peer group multiples. Piper Sandler's endorsement of Voya Financial with an Overweight rating remains unchanged, indicating confidence in the company's stock performance.
In other recent news, Voya Financial reported robust growth in its third-quarter earnings for 2024. The company's adjusted operating earnings per share (EPS) increased by 9% year-over-year, reaching $1.90. Key growth areas included Wealth Solutions and Investment Management, which saw increases of nearly 20% and over 10% respectively.
Despite some challenges in the Health Solutions sector, Voya acquired OneAmerica's retirement business, a move expected to boost pretax operating earnings by at least $75 million in its first year. The firm also announced plans to return $800 million in excess capital to shareholders in 2024.
While the Health Solutions sector faced some obstacles, Voya has a strategy in place to improve margins by 2025. These recent developments underscore Voya's strategic initiatives to drive growth and return value to shareholders.
InvestingPro Insights
Voya Financial's recent performance and future outlook align with several key metrics and insights from InvestingPro. The company's market capitalization stands at $8.04 billion, with a P/E ratio of 11.93, indicating a relatively attractive valuation in line with Piper Sandler's assessment.
InvestingPro Tips highlight that Voya has maintained dividend payments for 12 consecutive years and has raised its dividend for 6 consecutive years, demonstrating financial stability and commitment to shareholder returns. This is particularly relevant given the challenges faced in the Health Solutions sector, as it suggests the company's overall financial health remains strong.
The company's revenue growth of 11.07% over the last twelve months and a gross profit margin of 53.43% underscore the strong performance in Wealth Solutions and Investment Management divisions mentioned in the article. Additionally, Voya's stock is trading near its 52-week high, with a strong return of 28.27% over the last three months, reflecting market confidence in line with Piper Sandler's optimistic outlook.
For investors seeking more comprehensive analysis, InvestingPro offers 10 additional tips for Voya Financial, providing a deeper understanding of the company's financial position and market performance.
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