CFRA, on Friday, upgraded shares of Globe Life (NYSE: NYSE:GL) from Sell to Hold and increased the price target to $92.00 from $68.00, post-Globe Life posting second-quarter earnings per share (EPS) of $2.97, surpassing both the analyst's estimate of $2.81 and the consensus estimate of $2.91.
The improved performance was attributed to a 5% growth in premiums, an 8% increase in underwriting income, a 36% rise in investment income, and the reduction of shares from buybacks by 5%.
CFRA analyst's new 12-month target price represents a valuation of Globe Life shares at 6.9 times the projected 2026 operating EPS of $13.25 and 7.5 times the 2025 operating EPS of $12.25. The valuation compares with the company's one-year average forward multiple of 9.4 times and a peer average of 8.9 times. Additionally, the firm's 2024 EPS estimate was raised by $0.30 to $11.80.
The upgrade and price target increase reflects a reassessment after Globe Life's shares experienced significant downward pressure in mid-April 2024. At that time, a report by a short seller alleging insurance fraud within the company led to a sharp decline in stock value.
According to the analyst, while the immediate pressure on the shares has subsided, the firm's response to the allegations has been deemed insufficient.
Despite the upgraded rating and higher price target, CFRA does not recommend adding positions in Globe Life. The analyst cited the company's discounted valuation compared to historical averages and the unresolved issues surrounding the alleged insurance fraud as reasons for caution.
Globe Life reported a 20% increase in net income, reaching $258 million in its second quarter 2024 earnings call. Analysts from Piper Sandler have adjusted their price target for the company to $106 from $105, maintaining an Overweight rating on the stock.
The company's robust health segment earnings and solid distribution network contributed to an increase in the 2024 earnings per share (EPS) guidance. Globe Life is actively working on capital management strategies, aiming to unlock significant capital, with a target authorization of $1.3 billion by the end of 2025.
InvestingPro Insights
Following the recent upgrade of Globe Life (NYSE: GL) by CFRA, it's worth noting additional insights provided by InvestingPro. Globe Life's commitment to shareholder returns is evident, as the company has raised its dividend for an impressive 54 consecutive years, indicating a stable financial position and a reliable income stream for investors. Moreover, analysts have revised their earnings upwards for the upcoming period, reflecting a positive outlook on the company's profitability.
From a valuation standpoint, Globe Life is currently trading at a low P/E ratio of 8.07, which is attractive when aligned with the near-term earnings growth. This is further supported by a PEG ratio of 0.47, suggesting that the stock may be undervalued relative to its earnings growth potential. Additionally, with a strong return over the last three months of 17.94%, the stock is showing signs of recovery despite the hit it took over the last six months.
For investors seeking more in-depth analysis, there are additional InvestingPro Tips available that could provide further guidance on the potential investment opportunities with Globe Life. To explore these tips and gain a more comprehensive understanding of the company's financials, visit InvestingPro. Plus, use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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