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Tuesday, Wells Fargo (NYSE:WFC) analysts downgraded Voya Financial (NYSE:VOYA) stock from Overweight to Equal Weight.
The revision reflects concerns over the company's stop loss performance and anticipated challenges ahead.
Wells Fargo expressed caution regarding Voya Financial's future earnings potential, suggesting that the consensus earnings per share (EPS) estimates for 2025 might be overly optimistic.
The analysts adjusting the price target to $76.00 from a previous higher target pointed to the preliminary stop loss results disclosed by Voya Financial's management through November 2024 as a key factor in their assessment.
The company increased its January 2024 policy year loss ratio projection from 86% to a range of 90-105%. Although there could be a positive aspect if results are at the lower end of the range, Wells Fargo still views the outcome as unfavorable when considering the overall picture.
According to management, they expect the claims experience to be around 70% at the end of 2024. However, given this projection, the analysts at Wells Fargo anticipate that the development of results could be disappointing in the first half of 2025. They noted that management mentioned an approximate 18-month duration for the claims experience to fully develop.
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