On Wednesday, CFRA maintained a Hold rating on MetLife (NYSE: NYSE:MET) but increased the stock's share price target from $70.00 to $77.00. The adjustment reflects a valuation of MetLife's shares at 7.8 times the firm's 2025 operating earnings per share (EPS) estimate of $9.90 and 8.8 times the 2024 EPS estimate, which was revised down by $0.15 today to $8.80.
The new target price compares to MetLife's one-year average forward multiple of 7.2 times and a peer group average of 8.9 times. CFRA's revised target multiple takes into account MetLife's recent performance and future revenue growth projections.
Despite a modest 0.6% increase in operating revenues in 2023, due to lower pension risk transfer activity, CFRA forecasts operating revenue growth between 4% and 7% for the years 2024 and 2025.
The forecast is based on the assumption of a rebound in pension risk transfer activity, although the timing and scale of this recovery are uncertain. This lack of visibility is a factor in CFRA's rating decision.
The firm also considers MetLife's premium valuation relative to historical levels, as well as the potential benefits of the company's recent restructuring and cost-cutting measures on margins in the upcoming years.
CFRA notes that these factors, combined with the current dividend yield of 2.9%, contribute to their view of MetLife's shares as fairly valued and worth maintaining in an investment portfolio. The assessment suggests a balance between the potential for growth in the coming years and the uncertainties that may impact the company's performance.
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