In a report published Friday, Credit Suisse analyst Thomas Gallagher reiterated an Outperform rating on Voya Financial VOYA, and raised the price target from $44.00 to $48.00.
In the report, Credit Suisse noted, “Following our recent meeting with management, our review of the 3Q 10-Q, and the most recent sell down of ING's VOYA stake, we are increasing our target price from $44 to $48, and our 2015 operating EPS estimates from $3.20 to $3.45. Our estimate increase is primarily driven by 2 items, 1) higher share repurchase assumptions for 2015 moving from $600mm to $1b, and 2) our lower effective tax rate of 31% (vs. previous 35%), as we expect VOYA to begin to report a lower effective tax rate which would include its DRD benefit after the company releases its valuation allowance associated with its DTA. Our increased valuation from $44 to $48 reflects our increased earnings estimates, in addition to ascribing a higher multiple (11.5x vs. previous 11x), which is reflective of increased FCF visibility following last quarter's earnings call where the management acknowledged that FCF generation will remain 60%-70% vs. prior guidance of 50%.”
Voya Financial closed on Thursday at $39.26.
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