Brighthouse Financial Stock: Upgraded to 'Market Perform,' Price Target Adjusted
Brighthouse Financial, Inc. (NASDAQ: BHF) recently saw an upgrade in its stock rating. Keefe, Bruyette & Woods raised Brighthouse's rating from "Underperform" to "Market Perform." However, they slightly adjusted the price target from $48.00 to $47.00. This comes after a weak year-to-date performance of Brighthouse’s stock, which declined by 23% in contrast to gains in the life insurance and annuities sector.
Brighthouse vs. Competitors
While Brighthouse's stock dropped, competitors like Jackson (NYSE: JXN) saw a 38% increase, Corebridge Financial (NYSE: CRBG) gained 33%, Equitable Holdings rose by 21%, and Lincoln National Corporation went up by 16%. The reasons for Brighthouse’s underperformance include concerns over capital generation and the unpredictability of free cash flow trends.
Positive Steps Despite Challenges
Despite these challenges, Brighthouse has made steady improvements:
- Enhanced business mix
- Strengthened variable annuity hedging strategies
- Predicted free cash flow yield of 13% for 2025E
These efforts were reasons behind the analyst’s decision to upgrade the stock to "Market Perform."
Other Analyst Opinions
Piper Sandler was less optimistic, cutting Brighthouse's stock price target from $55.00 to $50.00. They kept a "Neutral" rating, citing concerns about the lack of a clear timeline for earnings scenarios and a projected drop in fixed annuity sales. They also highlighted increased competition in the registered indexed linked annuity (RILA) market.
Recent Performance Highlights
Despite the challenges, Brighthouse Financial had some positive news in 2024:
- Steady growth reported in Q1 2024
- Improved risk-based capital ratio
- Significant growth in SHIELD annuity product suite
- 26% increase in life insurance sales
- Repurchase of $62 million in common stock, showing commitment to shareholder value.
Investor Insights
Investors are closely watching Brighthouse Financial. InvestingPro data reveals:
- Market capitalization: 2.55 billion USD
- Price-to-book ratio: 0.61 (Last 12 months as of Q1 2024)
- Quarterly revenue growth: 23.66% in Q1 2024
- Significant gross profit margin pressure: Margin of -18.32%
Current Status and Future Outlook
Brighthouse is in a unique, transitional phase:
- Management’s share buyback strategy indicates confidence.
- Net income is expected to grow this year.
- The Relative Strength Index (RSI) shows the stock is oversold, which could attract bargain hunters.
- Trading near its 52-week low, analysts remain optimistic about a return to profitability this year.
Although Brighthouse does not pay dividends—potentially a downside for income-focused investors—the company's strong liquid assets position is a positive sign of financial stability.
Investors and analysts alike will be keeping a close watch on Brighthouse Financial’s next moves and market performance.
