Sun Life Financial Still Seeing Strong Results Despite Low Interest Rates

The brokerage thinks that its revised target implies a multiple of 12.8X to its 2016 EPS estimate, which is above the sector average. The target is justified, according to the analysts, by the company's "industry-leading ROE, growth in operating revenue and expanding international operations."

"Despite low interest rates and the impact of declining stock prices on its investment portfolio, the company reported stronger results in 1Q16. We also like SLF's relatively low investment exposure to the energy sector. Our target price implies a multiple of 12.8-times our 2016 EPS estimate, above the peer average, but justified in our view by the company's industry-leading ROE, growth in operating revenue, and expanding global operations," the analysts wrote.

Related Link: Sun Life Financial Raises Dividend To $0.015

Argus analysts pointed out, "Sun Life is a conservatively managed life insurer with a strong balance sheet, and its dividend yield of about 3.7 percent is above the peer average." The brokerage continued, "Earnings could be volatile reflecting turbulence in the company's investment holdings and the impact of currency repatriation." However, the analysts believe that the high yield provides an offset.

Also, the two analysts pointed out that the Asian and U.S. businesses are improving, as is the asset management business. The investment advisors also believe the recent weakness in shares could lead to increased stock buybacks.

At time of writing, the stock was ever so slightly down, trading at $43.28, down 0.05 percent on the day.