On Tuesday, Citi updated its financial model for Corebridge Financial (NYSE:CRBG), resulting in a raised price target for the company's stock. The new target is set at $29.00, an increase from the previous figure of $21.00. Despite the adjustment, Citi has decided to maintain a Neutral rating on the stock.
The revision comes after the analyst at Citi considered the 2025 estimated earnings per share (EPS), which has been adjusted upwards to $5.42 from the earlier estimate of $5.26. This update is primarily attributed to a reduced share count, which reflects the expectation of higher buybacks funded by more robust organic free cash flow generation.
However, Citi's 2025 EPS forecast remains 7% below the consensus. This cautious stance is largely due to the firm's projection for the Life insurance segment earnings, which, according to the analyst, may not meet the market's high expectations, particularly concerning top-line growth and base net investment income.
The methodology behind the new price target involves a sum-of-the-parts driven price-to-earnings (P/E) multiple of 5.9x, based on the updated 2025 EPS estimate. This multiple has been rolled forward from the previous year's estimate.
Moreover, Citi factors in a 10% discount, equivalent to $3 per share, to account for the potential impact of ongoing sell-downs by Corebridge Financial's parent company. After the discount, the net multiple used stands at 5.4x the 2025 EPS estimate.
The analyst concluded the update by highlighting the applied adjustments and the rationale behind the new price target, emphasizing the discount applied to address the overhang on shares from the parent company's continued sell-downs.
In other recent news, Corebridge Financial has been the focus of multiple analyst adjustments and significant business developments. Piper Sandler maintained an Overweight rating on Corebridge Financial following AIG (NYSE:AIG)'s secondary stock sale of approximately 5.7% of Corebridge Financial's shares. This move is expected to reduce AIG's ownership in Corebridge Financial to below the majority threshold.
In addition, Evercore ISI increased its price target for Corebridge Financial to $34.00, up from the previous $31.00, following an announcement from AIG regarding a significant share transaction with Nippon Life. The transaction involves AIG selling about 120 million shares of Corebridge common stock to Nippon Life for approximately $3.8 billion, representing a 20% stake in Corebridge.
Piper Sandler also increased its price target on Corebridge Financial shares to $35, citing the company's strong performance and the potential for a de-consolidation from its parent company, AIG. Corebridge Financial's recent authorization of an additional $2 billion for share repurchases was highlighted as a positive signal of the company's financial strength.
RBC Capital increased its stock price target for Corebridge Financial shares to $33 from $32, following Corebridge Financial's recent earnings report which showed a performance that slightly exceeded expectations. Lastly, Piper Sandler showed confidence in Corebridge Financial by raising its price target on the company's stock to $34 from $34 while maintaining an Overweight rating. These are the latest developments in the evolving story of Corebridge Financial.
InvestingPro Insights
Following Citi's recent price target update for Corebridge Financial (NYSE:CRBG), an analysis of real-time data and InvestingPro Tips reveals additional insights into the company's financial health and market position. With a market capitalization of $17.82 billion and a P/E ratio that has been adjusted to 9.44 for the last twelve months as of Q1 2024, Corebridge Financial appears to be trading at a low earnings multiple, which might interest value investors. Furthermore, the company's dividend yield stands at an attractive 7.1%, signaling a significant return to shareholders.
InvestingPro Tips suggest that Corebridge Financial is expected to see net income growth this year, with five analysts having revised their earnings upwards for the upcoming period. This could indicate a positive outlook on the company's financial performance, aligning with the raised EPS estimates by Citi. Moreover, Corebridge Financial has been identified as a prominent player in the Financial Services industry, with a strong return over the last three months and a substantial price uptick over the last six months.
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