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As such, Argus initiated coverage of Brighthouse with a Hold rating.
The firm noted that the company's shares have underperformed since the Aug. 7 spin-off, dipping 13.1 percent compared to a mere 1.8-percent drop in the S&P MidCap 400 Index.
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Analysts Jacob Kilstein and Michael Jaffe believe this provider of life insurance and annuity products has the opportunity to reshape its operations over the next several years. However, the analysts think it has limited near-term growth prospects, given declining demand for annuity plans in the U.S. and the recent reduction in its roster of policies.
The analysts noted that the company has discontinued new sales of whole life and certain term-life policies.
"We also expect margins to face pressure due to post-spinoff expenses, including the costs of transition service agreements with MetLife, and interest costs on $3 billion of recently issued debt," the firm said.
Argus expects the company to earn $9 per share in 2017 and $8.70 per share in 2018. At the same time, the firm expects operating revenues to decline 9.5 percent to $8.1 billion in 2017 and to remain flat in 2018. Also, the firm estimates five-year earnings growth rate of 3 percent.
With the near-term outlook weak, the firm said Brighthouse shares appear fairly valued at 6.3 times its 2018 earnings per share estimate, with the valuation below the peer average of 8.2.
The firm indicated that it would consider an upgrade on signs of a sustainable upturn in revenue and earnings.
Related Link: Jim Cramer Advises His Viewers On Metlife, Brighthouse Financial And B&G FoodsCrypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.