On Thursday, Evercore ISI updated its financial outlook for Globe Life Inc. (NYSE:GL), raising the price target to $95 from the previous $86, while maintaining an In Line rating for the stock. The firm's decision reflects a positive view on the company's future free cash flow (FCF) and the impact of its share repurchase strategy.
The firm's analyst cited several reasons for the increased price target, including Globe Life's indication that its 2025 FCF is expected to be higher than in 2024. Additionally, an aggressive share repurchase program is anticipated to decrease the share count by about 10% over the next year, which should enhance FCF per share. By the end of 2025, FCF per share is projected to reach between $5.75 and $6.00.
To arrive at the new price target of $95, Evercore ISI applied a 16x multiple to the expected FCF per share. This valuation is in line with the trading multiples of 15-16x P/FCF seen for some of Globe Life's slower-growing, underwriting-focused peers, such as AFL and CNO.
In other recent news, Globe Life Inc. has seen significant developments on multiple fronts. The company's earnings per share (EPS) projections for 2024 and 2025 have been revised upward to $11.95 and $12.75, respectively, by Truist Securities, which has also raised Globe Life's price target to $90 and maintained a Hold rating. This is based on the company's plans to buy back more shares than previously anticipated.
In addition, Globe Life has successfully cleared allegations of financial misconduct following an independent investigation. The allegations, brought forth by short-seller firms Viceroy Research and Fuzzy Panda Research, were found to be unfounded with no adjustments to the company's financial statements or disclosures deemed necessary.
Furthermore, the company's Board of Directors approved a significant stock repurchase program worth up to $1.3 billion, set to conclude by the end of 2025. Globe Life has also announced a quarterly dividend of $0.24 per share, scheduled for payment in August 2024.
On the analyst front, Piper Sandler maintained an Overweight rating on Globe Life shares, albeit with a reduced stock price target, and suggested that Globe Life might soon reveal plans for a Bermuda entity. These are the recent developments for Globe Life.
InvestingPro Insights
According to the latest data from InvestingPro, Globe Life Inc. (NYSE:GL) is demonstrating financial resilience and potential for investors. With a market capitalization of $8.05 billion and a compelling P/E ratio of 8.02, which aligns with the company's near-term earnings growth, the company stands out in the financial sector. This low P/E ratio, coupled with a PEG ratio of 0.47, suggests that the stock may be undervalued relative to its earnings growth potential. Additionally, Globe Life has shown a commitment to shareholder returns, having raised its dividend for 8 consecutive years and maintaining dividend payments for an impressive 54 consecutive years.
InvestingPro Tips highlight that despite short-term obligations exceeding liquid assets, the company has been profitable over the last twelve months. Moreover, analysts are optimistic about the company's profitability for the current year. These insights are particularly relevant for investors considering Globe Life's stock performance, which has seen a strong return over the last three months, with a 17.21% price total return, despite taking a hit over the last six months.
For readers interested in deeper analysis and additional insights, there are more InvestingPro Tips available for Globe Life Inc. These can provide further guidance on investment decisions, and by using the coupon code PRONEWS24, readers can get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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