Sell-Side Mostly Positive On Athene Holding As Quiet Period Expires

Now that the quiet period — the mandatory 40- or 90 day-period from the commencement of the IPO when companies are banned by a SEC regulation from promotional publicity — has expired, sell-side analysts have offered their views on the company. The company announced the launch of its IPO on November 28, 2016.

Athene Has Multiple Favorable Catalysts

Barclays' Jay Gelb listed some favorable catalysts that could benefit Athene, including the potential for an upgrade from A.M. Best in 2017, over $1 billion of excess capital to deploy in acquisitions, $1 billion–$1.5 billion of debt capacity, potential delay or less onerous implementation of the Department of Labor's fiduciary standard rule and its structurally low tax rate of 7 percent, resulting from its Bermuda domicile. Additionally, the company does not expect to pay a shareholder dividend or repurchase shares, the analyst added.

Barclays initiated coverage of the shares of Athene with an Overweight rating and a $54 price target.

Credit Suisse Initiates At Neutral

Credit Suisse initiated coverage of Athene at Neutral, with a $50 price target. The nearly 20 percent appreciation in the shares of Athene since the IPO justifies the firm's sidelined position.

The firm views the highly levered business model to rising interest rates, significant excess capital and capital adequacy, less relative exposure to DoL versus peers, more diversified source of growth versus peers and strong and seasoned management team as investment positives.

The firm estimates fourth quarter 2016 earnings per share of $1.21 and 2017/18 earnings per share of $4.20/$4.75.

Straightforward Story With Easy-To-Understand Business Model

RBC Capital Markets views Athene as a straightforward story with an easy-to-understand business model and a record of success. Analyst Mark Dwelle believes the company is a proven asset accumulator, delivering good organic growth in addition to a strong track record as an acquirer. The analyst also highlighted the company's relationship with Apollo Global Management, which helps it to generate above-average spreads, its clean balance sheet, excess capital and no legacy concerns.

RBC Capital Markets initiated Athene with an Outperform rating and a $54 price target.

Athene Offers Differentiated Growth

Deutsche Bank initiated Athene with a Hold rating and a $53 price target. Analysts Yaron Kinar and Sam Desai noted that the company offers differentiated growth, with superior mid-teen unlevered returns, earnings sensitivity to rising interest rates and limited balance sheet liability risk.

The analysts believe top- and bottom-line growth is achievable, although it could come at the price of sub-par FCF generation and no capital return to shareholders. According to the analysts, enhanced investment yields and a tax advantage are two keys to superior returns. The firm expects the company to grow flows at 9–12 percent CAGR through 2021.

At the time of writing, Athene shares were slipping 1.91 percent to $47.13.