MetLife Shares Rise on Q3 Earnings Beat; Target Price $74

MetLife, one of the world’s largest life insurers, reported better-than-expected earnings in the third quarter and said its adjusted net investment income increased by 21%, mainly due to higher variable investment income from strong private equity returns.

The New York-based insurer reported adjusted earnings of $2.1 billion, up 31% from the third quarter of 2020. On a per-share basis, adjusted earnings rose 38% to $2.39 from the prior-year period. That was higher than the Wall Street consensus estimates of $1.74 per share.

The insurance company said its net investment income rose 18% to $5.6 billion from a year earlier. Adjusted net investment income was $5.7 billion, up 21% from the prior-year period, largely driven by higher variable investment income primarily due to strong private equity returns. Net income was $1.5 billion, compared to net income of $633 million in the third quarter of 2020.

An increase in investment income has helped global life insurers offset payouts increased payouts related to the COVID-19 pandemic crisis.

“MetLife delivered another very strong quarter. Outstanding variable investment income more than offset elevated COVID-19 claims, underlying PFO growth was strong, and expense discipline held firm. Having the right strategy, a superior asset mix, and consistent execution continues to generate exceptional earnings,” said MetLife President and CEO Michel Khalaf.

MetLife shares rose 2.50% to $65.28 on Wednesday. The stock surged nearly 40% so far this year.

Analyst Comments

“Variable investment income was considerably above, COVID-related claims were significantly worse, making for a noisy quarter. Underlying the noise – core results were solid, matching our expectations, augmented by aggressive capital management,” noted Nigel Dally, equity analyst at Morgan Stanley.

“Forward estimates largely unchanged, reiterate our overweight rating: We are increasing our COVID-expected impact for 4Q21, leading us to trim our EPS to $1.40 (down $0.25). Our 2022 and 2023 estimates, which include normal VII and no incremental pandemic impacts, remain unchanged at $7.30 and $7.75 respectively, as does our $75 price target.”

MetLife Stock Price Forecast

Six analysts who offered stock ratings for MetLife in the last three months forecast the average price in 12 months of $74.33 with a high forecast of $77.00 and a low forecast of $72.00.

The average price target represents a 13.86% change from the last price of $65.28. All of those six analysts rated “Buy”, according to Tipranks.

Morgan Stanley gave the base target price of $75 with a high of $86 under a bull scenario and $51 under the worst-case scenario. The firm gave an “Overweight” rating on the insurer company’s stock.

Several other analysts have also updated their stock outlook. Barclays raised the price target to $72 from $69. Piper Sandler lifted the price target to $77 from $75. BofA upped the price objective to $74 from $70.

We think it is good to buy at the current level and target $74 as a 100-day Moving Average, and a 100-200-day MACD Oscillator signals a strong buying opportunity.

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