On Monday, Jefferies made a notable adjustment to its stance on Lincoln National Corporation (NYSE:LNC), shifting from an "Underperform" rating to a "Hold." Accompanying this upgrade, the firm also increased the price target for the insurance company's stock to $26.00, up from the previous $22.00.
The revision follows a performance dip for Lincoln National, with its shares dropping by 4%. Jefferies cited two main reasons for the rating change: the expected Risk-Based Capital (RBC) ratio, which is anticipated to be around 425% following the sale of the wealth management segment, aligning with the company's target, and the enhanced clarity on the insurer's strategy to boost its Free Cash Flow (FCF).
Lincoln National has provided guidance suggesting that by 2026, its FCF could approximate $0.8 billion. This figure is close to the $0.9 billion run-rate before the pandemic and the Strategic Growth and Underwriting Excellence (SGUL) charge, and it surpasses Jefferies' prior estimate of about $0.6 billion. While this outlook depends on the successful implementation of various initiatives, the trajectory is perceived as positive.
The new price target of $26 set by Jefferies reflects a more optimistic view of Lincoln National's prospects, no longer supporting an "Underperform" rating. The company's progress and strategic plans appear to be moving in a favorable direction, as reflected by the analyst's updated expectations.
InvestingPro Insights
As Lincoln National Corporation (NYSE:LNC) experiences shifts in analyst ratings and strategic direction, the latest data from InvestingPro provides additional context for investors considering the company's stock. According to recent metrics, Lincoln National has a market capitalization of approximately $4.35 billion USD. Despite challenging conditions reflected in a negative revenue growth of -37.95% over the last twelve months as of Q4 2023, the company has shown a strong return over the last three months, with an 18.36% price total return.
Two InvestingPro Tips that stand out for Lincoln National include the expectation of net income growth this year and the company's historical consistency in paying dividends. Specifically, Lincoln National has maintained dividend payments for 54 consecutive years, with a current dividend yield of 7.02%. This commitment to returning value to shareholders, alongside the anticipated profitability for the year, may be a signal of stability for investors.
While the company's P/E ratio stands at -5.21, indicating recent unprofitability, analysts predict a turnaround with the company becoming profitable this year. For investors looking for more in-depth analysis and additional InvestingPro Tips, there are 9 more tips available on InvestingPro's platform for Lincoln National Corporation, which can be accessed at https://www.investing.com/pro/LNC. Use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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