Credit Suisse analyst John Nadel has initiated researchcoverage on the U.S. life insurance sector.
Nadel initiated coverage on with an"outperform" rating, saying the company's shares are undervalued andrisk/reward is attractive at current levels. The analyst said Voya's businessesare "under-earning" and expects return on equity and operating EPS tosignificantly improve through margin expansion in several segments and through capitaldeployment via share repurchases. Nadel has a price target of $39 on thecompany's stock. His EPS estimates are $2.98 for 2016 and $3.73 for 2017.
The analyst initiated coverage on with an"underperform" rating and a price target of $75. Nadel said Aflac'sshares have appreciated by 20% year-to-date and are pricing in an oversizedeconomic benefit from recent strengthening in the yen. Slow earnings growth andthe unpredictable Japanese economy should lead to ROE compression in the nextfew years, the analyst wrote. Nadel's EPS estimates are $6.79 for 2016 and$7.09 for 2017.
Initiating coverage on Principal Financial Group Inc. with an "underperform"rating, Nadel said the company's strong free cash flow generation and ROEimprovement will continue but at a slower pace than in the past several years.The analyst expects slow EPS growth and flat margins in the near to immediateterm due to intense competition, ongoing pressure on fees and spread pressurefrom lower interest rates. The analyst has a price target of $53 on thecompany's stock. His EPS estimates are $4.43 for 2016 and $4.75 for 2017.
Nadel initiated coverage on American Equity Investment Life Holding Co., , , , , , , Torchmark Corp.and Unum Group with a"neutral" rating.