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Investing.com -- UBS downgraded Corebridge Financial to "Sell" from "Buy," citing near-term risks to earnings and assets under management that contrast with an increasingly bullish market stance on the annuity provider.
The bank set a price target of $28 per share, implying an 11% downside from current levels, and noted that it expects lower fee revenues due to net outflows in individual retirement (IR) accounts and group annuities.
UBS projects that IR AUM could see a 4% decline through 2026, driven by surrender pressures in fixed and indexed annuities as well as annualized variable annuity (VA) outflows of $5 billion.
UBS estimates Corebridge’s earnings per share for 2025 and 2026 will be 6% and 8% below consensus forecasts, respectively, attributing the gap to weaker net flows and ongoing fee pressures.
The firm also does not expect a material shift in Corebridge’s 60-65% payout ratio target, arguing that the company faces a long-term valuation challenge due to its outsourced investment management strategy.
While UBS acknowledged Corebridge’s strong position in the annuity market, it cautioned that consensus estimates may be too aggressive, particularly as variable annuity outflows weigh on earnings.
The bank also pointed to potential volatility stemming from recent changes to annuity disclosures, which it said could make forecasting more challenging.
UBS lowered its valuation multiple for Corebridge, assigning a 5.1x price-to-earnings ratio on 2026 estimates, down from its prior 6.0x multiple, leading to the reduced $28 price target.