On Tuesday, Piper Sandler upgraded CNO Financial Group, Inc. (NYSE:NYSE:CNO) stock from Neutral to Overweight, setting a price target of $29.00. This adjustment reflects a change in the firm's outlook on the insurance company's shares, which have lagged behind the broader life insurance sector's performance in the year to date.
CNO Financial's shares have declined by 9.6% in 2024 compared to a 1.6% drop in the S&P 1500 Life & Health Insurance Index. The life insurance group is currently considered approximately 13% undervalued, which is a widening gap from the previous week's estimate of 5%. Piper Sandler's upgrade is based on several factors that are anticipated to diminish the stock's underperformance.
The firm identifies CNO Financial's current valuation as attractive, especially after the stock faced market challenges affecting the industry. Additionally, the scarcity of small to mid-cap life insurance companies is seen as increasing the appeal of CNO Financial. The company's product portfolio, which is not heavily reliant on legacy liabilities, is another point in its favor.
Moreover, CNO Financial has been a few quarters removed from completing the establishment of CNO Bermuda, a strategic move expected to provide the company with more options for managing its liability profile.
Piper Sandler suggests that CNO could leverage its Bermuda entity beyond supporting annuities, which could present new opportunities for the insurer. The firm's revised price target of $29.00 reflects these considerations and the potential for CNO Financial's stock to appreciate from its current valuation.
InvestingPro Insights
Piper Sandler's recent upgrade of CNO Financial Group to Overweight with a price target of $29.00 is further substantiated by key financial metrics and strategic moves by the company. According to InvestingPro data, CNO Financial boasts a market capitalization of $2.74 billion and an attractive price-to-earnings (P/E) ratio of 9.91, indicating a potentially undervalued stock. The company's revenue growth is also notable, with a 15.94% increase in the last twelve months as of Q4 2023, outpacing many of its peers in the life insurance sector.
InvestingPro Tips highlight that CNO Financial's management has been actively repurchasing shares and has consistently raised its dividend for 12 consecutive years, demonstrating a commitment to returning value to shareholders. The company's liquid assets exceeding short-term obligations, coupled with a solid gross profit margin of 39.64%, suggest a strong balance sheet and operational efficiency. Additionally, analysts expect CNO Financial to remain profitable this year, having been profitable over the last twelve months.
For investors looking to delve deeper into CNO Financial's performance and potential, InvestingPro offers additional insights and metrics. There are currently 6 more InvestingPro Tips available, which can be accessed by visiting: https://www.investing.com/pro/CNO. To enhance your investment research, use the coupon code PRONEWS24 for an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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