Wells Fargo: MetLife Guidance Reflects In-Line EPS

MetLife Inc MET released its top-line and operating earnings growth guidance for 2019; while the company has not provided explicit EPS guidance for several years, the latest projections reflect EPS in-line with expectations, according to Wells Fargo.

The Analyst

Analyst Elyse Greenspan maintains an Outperform rating on MetLife with an unchanged $60 price target.

The Thesis

MetLife’s guidance and indications on key sensitivities help multiyear forecasting, although the company tends to offer conservative projections, Greenspan said in a Thursday note. (See her track record here.) 

The latest guidance suggests a 2019 EPS in-line with the consensus estimate of $5.57, the analyst said. 

MetLife expects an ROE of 12-14 percent in 2019. In the U.S., the company’s guidance for group benefits is better than expected; in-line for property and casualty; and weaker for property and casualty retirement and income solutions, Greenspan said. 

For Asia and Latin America, the company’s projections were better than expected, but weaker than anticipated in Europe and the Middle East, the analyst said. 

The company guided to a 5-percent decline in operating premiums, fees and other revenues for MetLife Holdings versus Wells Fargo's estimate of a 4.6-percent downturn. Operating earnings are projected at $1 to $1.2 billion, broadly in-line with expectations. 

MetLife expects corporate and other after-tax earnings of $550-750 million vs. Wells Fargo's $659-million forecast.  

MetLife guided to pre-tax expense initiative costs of around $300 million, in-line with the estimate. The company's effective tax rate is expected to be 18-20 percent in 2019.

Price Action

MetLife shares were down 1.59 percent at $38.89 at the close Friday.  

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