'Attractive, Capital-Light' Business Mix Makes Voya Financial A Potential Takeover Target, Says Credit Suisse

Voya Financial Inc VOYA’s organic growth is driving return on equity improvements, while a capital-light business mix and reasonable valuation could make it a M&A target, according to Credit Suisse.

The Analyst

Andrew Kligerman of Credit Suisse initiated coverage on Voya Financial with an Outperform rating and $60 price target.

The Thesis

Voya’s business mix includes retirement, investment management and group benefits.

Organic growth in capital management, retirement and investment management along with divestiture from the annuities business have driven continued ROE improvement, Kligerman said in a Tuesday note. 

“We project adjusted operating ROEs of 9.9 percent in 2018E and 12.3 percent in 2019E (vs. 3.9 percent in 2017), led by the annuities divestiture and organic growth in retirement and investment management, and capital management." 

Voya Financial could be an "attractive" takeover candidate, the analyst said.

While reported negotiations with American International Group Inc AIG ended in November, several other potential buyers could be eyeing the investment and insurance company, Kligerman said. 

“Japanese life insurers in search of higher returns, such as Sumitomo Life, Meiji Yasuda Life, and Nippon Life, and companies with interest in defined contribution, such as Fidelity and TROW, could fit the profile of an acquirer." 

Price Action

Voya Financial stock was up 0.076 percent at $52.75 at the close Wednesday. 

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