On Thursday, CFRA maintained a Hold rating on Lincoln National Corporation (NYSE:LNC) but increased the stock's price target from $28.00 to $31.00. The adjustment reflects a valuation of the company's shares at 4.8 times the estimated operating earnings per share (EPS) for 2024, and 4.1 times the estimated EPS for 2025. This compares to Lincoln National's one-year average forward multiple of 3.6 times and the peer average of 8.5 times.
The firm anticipates that Lincoln National's operating revenues will either remain steady or grow up to 5% in 2024. This follows a year where revenues declined by 11.2%, which aligned with the forecasted drop of over 10%. The growth in net investment income, expected to be between 5% and 7% in 2024, is predicted to help balance a projected decline of more than 10% in life insurance sales due to a strategic pullback.
CFRA acknowledges the steps Lincoln National has taken to strengthen its capital position, such as reinsuring a significant block of long-term policy obligations. Despite these efforts, the firm anticipates that the company's performance in 2024 and 2025 will likely continue to experience volatility, and the long-term outlook remains uncertain.
The analyst advises against adding to positions in Lincoln National, citing the potential instability in the company's results. Nonetheless, with a current yield of 6.2%, the Hold rating is reaffirmed, suggesting that investors maintain their existing positions in the stock.
InvestingPro Insights
As Lincoln National Corporation (NYSE:LNC) navigates a period of financial recalibration, insights from InvestingPro offer a nuanced view of the company's current standing. A notable InvestingPro Tip is the expectation of net income growth this year, which could signal a positive turnaround following recent revenue declines. Additionally, the company's commitment to dividend consistency is underscored by its impressive track record of 54 consecutive years of dividend payments, a fact that aligns with CFRA's mention of Lincoln National's appealing yield for investors.
InvestingPro Data further reveals a market capitalization of $4.97 billion, indicating the company's significant presence in its sector. However, a negative P/E ratio of -5.93 reflects the challenges faced in the last twelve months as of Q1 2023. On a brighter note, a strong return over the last year, with a 54.39% price total return, showcases the stock's resilience and potential for recovery. This performance is particularly relevant for shareholders considering the stock's recent volatility.
For those seeking a comprehensive analysis, InvestingPro provides additional tips on Lincoln National Corporation, which can be accessed at https://www.investing.com/pro/LNC. Moreover, readers can use the coupon code PRONEWS24 to receive an extra 10% off a yearly or biyearly Pro and Pro+ subscription, gaining access to an extensive suite of tools and analytics tailored to enhance investment strategies.
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