Argus Cuts MetLife's Target From $62 To $54, Stock Still A Buy

Argus’ Jacob Kilstein reiterated a Buy rating on Metlife Inc MET, while lowering the price target from $62 to $54.

“Our rating reflects the stock’s attractive valuation, as well as the company’s global initiatives and efforts to return cash to shareholders,” Kilstein said.

Stock Catalysts

The company has announced the sale of its retail life insurance and variable annuity businesses on February 29 to MassMutual. Kilstein expects this sale to reduce costs as well as Metlife’s exposure to riskier assets.

Related Link: MetLife Offers Update On Stratgic Alternatives, Confirms Onging Discussions With MassMutual

“We believe that the deal, which is expected to close in 2H16, will pave the way for a new share repurchase announcement and for the elimination of MetLife’s SIFI designation, which could be catalysts for the stock,” the analyst said

Kilstein believes that MetLife is an industry leader that warrants a higher multiple and mentioned that the company has a track record of steady dividend growth, with a current yield of about 3.6 percent.

Estimate Changes

The EPS estimate for 2016 has been lowered from $6.00 to $5.67 to reflect the weak 4Q results and the recent operating trends. The 2017 EPS estimate is set to $6.07.

“Our estimates assume a modest increase in book value each year and an ROE of 11 percent,” the analyst added.