On Thursday, BMO Capital Markets initiated coverage on Corebridge Financial, trading on the New York Stock Exchange under the ticker (NYSE:CRBG), with an Outperform rating and a price target of $43.00. The company, with a market capitalization of $18.36 billion and current trading price of $32.27, has generated revenues of $15.98 billion in the last twelve months. The firm's analysis points to favorable capital market conditions and interest rate levels that are expected to support growth in Corebridge Financial's spread-based lines of business. These lines include fixed annuities and pension risk transfer.
The analyst from BMO Capital highlighted that Corebridge Financial has demonstrated a consistent ability to generate steady cash flow. This performance translates into a forward free cash flow (FCF) yield of over 10%, which is seen as highly attractive. According to InvestingPro data, the company generated $1.439 billion in levered free cash flow over the last twelve months, while maintaining a healthy dividend yield of 2.85%. According to the analyst, the stock offers limited downside risk, with additional potential for upside if the company successfully implements external risk transfer strategies or further capitalizes on a more capital-efficient Bermuda regulatory framework.
The Outperform rating suggests that BMO Capital Markets anticipates Corebridge Financial's stock to outperform the average total return of the stocks covered by the analyst over the next 12 months. InvestingPro analysis reveals two important insights: management has been aggressively buying back shares, and net income is expected to grow this year. Subscribers can access 4 additional exclusive ProTips and comprehensive valuation metrics through the platform's detailed research reports. The $43.00 price target is based on the firm's assessment of the company's prospects and the current financial environment.
In the statement provided, BMO Capital Markets acknowledged the headwinds of spread pressure but indicated that these challenges are already accounted for in the market's expectations. This assessment implies that the market has already factored in the potential negative impacts on the company's spread-based revenue streams.
Corebridge Financial's stock rating was positively received on the day of the announcement, as BMO Capital Markets is known for its research and analysis in the financial sector. The stock's current valuation metrics and detailed analysis are available in the comprehensive Pro Research Report, one of 1,400+ deep-dive reports available exclusively to InvestingPro subscribers. The firm's coverage initiation and price target provide investors with a new data point to consider when evaluating the company's stock.
In other recent news, Corebridge Financial has been the subject of upgrades from both Deutsche Bank (ETR:DBKGn) and Barclays (LON:BARC). Deutsche Bank analysts have raised their stock rating from Hold to Buy, setting a new target price of $40, based on the company's potential for significant organic growth in 2025. This optimistic outlook is backed by favorable demographics, a robust equity market, and a period of higher interest rates. Barclays also upgraded Corebridge Financial to Overweight, setting a new price target of $37, citing benefits from the high-interest rate environment and potential for accretive reinsurance transactions.
Corebridge Financial recently reported strong third-quarter results for 2024, with a 31% year-over-year increase in operating earnings per share (EPS) to $1.38. The company's individual retirement premiums and deposits surged 40% to $5.5 billion. In addition, Corebridge issued $600 million in junior subordinated notes as part of its strategic financing efforts.
Other recent developments include the successful launch of the company's first registered index-linked annuity (RILA) and increases in Group Retirement and Life Insurance (NSE:LIFI) sales by 10% and 14% respectively. Corebridge is also exploring business opportunities in Bermuda. These recent developments indicate a strong outlook for continued growth and efficiency in the company's operations.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.