Wells Fargo analyst Elyse Greenspan started coverage of Axa Equitable Holdings Inc. with a "market perform" rating and resumed coverage of Prudential Financial Inc. and Lincoln National Corp. at "outperform" and "market perform," respectively.
Greenspan wrote that Axa Equitable's shares have traded at a discount compared to life peers' following its IPO in May 2018 and are the least expensive across her coverage. She said the company's strategic initiatives, which include rebalancing general account into more corporate securities and improving expense management, should support 5% to 7% earnings growth. However, she said the shares offer a neutral risk/reward given higher market sensitivity and expects the company's multiples to remain at a discount compared to peers.
Greenspan wrote that Prudential Financial is a franchise name among global life insurers, noting its dominant market position in the large-case pension risk transfer business, broad and diversified business mix and high-returning Japanese business. She said Prudential Financial is the most diverse life insurance company, which gives it the ability to adapt and focus on markets with higher growth potential.
Greenspan views Lincoln National as a strong domestic franchise characterized by consistent EPS growth, return on equity expansion and return of capital. She anticipates that the company's capital return will represent 15% and 9% of its current market cap in 2019 and 2020, respectively. In the absence of any mergers and acquisitions opportunities, she expects that buybacks will be the company's primary use of capital in 2019 and 2020.