On Wednesday, Barclays initiated coverage on AXA Equitable Holdings Inc (NYSE:EQH) with an Overweight rating and set a price target of $59.00. The firm's analysis highlights several key factors that contribute to the positive outlook on the company.
These include a shift towards more capital-efficient products that has been generating positive momentum in cash flow, a robust capital position, and promising growth prospects in spread-based products, especially structured annuity offerings.
The firm's perspective on AXA Equitable Holdings is bolstered by what it views as a strong profitability profile. According to Barclays, compared to its peers, AXA Equitable's earnings are less dependent on credit risk, which is seen as a positive differentiator in the market. This aspect of the company's operations could provide it with a relative advantage, especially in uncertain economic conditions.
The Overweight rating suggests that Barclays expects the stock to outperform the average total return of the stocks covered by the analyst in the sector over the next 12 months. The price target of $59.00 implies a potential upside from the company's recent trading price, though the current market price was not provided in the context.
AXA Equitable Holdings has been making strategic moves to enhance its financial products, which Barclays believes will lead to favorable outcomes for the company. The focus on capital efficiency and the strategic shift towards certain financial products are seen as key drivers for future growth and profitability.
Investors and market watchers will likely monitor AXA Equitable Holdings' performance to see if it aligns with Barclays' expectations. The Overweight rating and the $59.00 price target provide a benchmark against which the company's market performance can be measured in the coming months.
In other recent news, Equitable Holdings reported a strong second quarter, showcasing growth across its Retirement, Asset Management, and Wealth Management divisions.
The company's non-GAAP operating earnings rose 23% year-over-year to $494 million, and assets under management and administration saw an 11% increase, reaching $986 billion. Equitable Holdings also returned $325 million to shareholders in Q2 and projected to generate between $1.4 and $1.5 billion in cash by 2024.
In addition to its financial performance, Equitable Holdings is actively exploring additional partnerships similar to those with AB and BlackRock (NYSE:BLK). Despite some negative flows in the Group Retirement business due to higher interest rates and larger account balances, the company's Wealth Management business is demonstrating strong growth.
The company aims to achieve 12-15% annual EPS growth through 2027 and expects increased inflows in late 2024 and early 2025. As part of its future plans, Equitable Holdings is also focusing on reducing mortality volatility and improving returns in its protection business.
InvestingPro Insights
AXA Equitable Holdings Inc (NYSE:EQH) is garnering attention with Barclays' recent Overweight rating and a bullish price target of $59.00. Supporting this outlook, InvestingPro data shows a robust financial profile with a market capitalization of $13.22 billion and a forward P/E ratio suggesting reasonable valuation at 15.86. The company's commitment to shareholder returns is evident, with a track record of raising its dividend for six consecutive years, a factor that may appeal to income-focused investors.
InvestingPro tips indicate that management's confidence in the company is reflected through aggressive share buybacks, and despite analysts revising earnings estimates downwards, AXA Equitable is expected to maintain profitability this year. The company's liquid assets surpassing short-term obligations speaks to its financial health, which is crucial for sustaining its growth trajectory and managing potential market fluctuations.
For investors seeking more in-depth analysis, there are additional InvestingPro tips available at https://www.investing.com/pro/EQH. These could provide further insights into the company's performance and future outlook, helping investors make more informed decisions.
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