On Monday, B.Riley maintained its Buy rating on Abacus Life Inc. (NASDAQ: ABL) shares and raised the price target to $17.00 from $16.00. The adjustment comes after the company's recent $100 million common stock offering, which occurred on Thursday, November 21. The offering included $20 million in secondary shares.
The firm's analyst cited increased earnings per share (EPS) estimates as a reason for the price target change. The forecast for the fourth quarter of 2024's adjusted EPS was increased from $0.16 to $0.18.
Moreover, the 2025 adjusted EPS estimate was raised from $1.03 to $1.05, and the 2026 adjusted EPS estimate from $1.50 to $1.56. The analyst expects that the majority of the proceeds from the offering will be utilized to purchase policies in line with Abacus Life's core originate-to-sell model.
The decision to issue equity was influenced by particularly favorable conditions in the secondary market, according to Abacus Life's CEO Jay Jackson. The company had previously raised $92 million in equity in June and had rapidly deployed these funds within two months at high margins and above historical averages.
The analyst also noted the potential impact of declining short-term rates through 2025, suggesting that the capital raise positions Abacus Life advantageously in the market. The expectation is that as the Federal Reserve continues to lower rates, the policies acquired by Abacus will likely rally.
Lastly, the report touched upon the anticipated closing of the Carlisle deal in late fourth quarter of 2024, which is expected to further improve Abacus Life's balance sheet. The company's existing 9.875% public bond (due 2028) is currently trading at 105, indicating investor anticipation for debt financing in the future, which could accelerate the pace of acquisitions for Abacus Life.
In other recent news, Abacus Life Inc. has been the subject of favorable analyst attention, with Piper Sandler raising its price target from $12.00 to $13.00 and maintaining an Overweight rating. This follows the company's robust performance, with revenue and adjusted EBITDA surpassing initial guidance and $93 million deployed during the quarter.
Moreover, Piper Sandler has revised upward the adjusted EBITDA estimate for 2024 to $59 million and core EPS estimates for 2024 to 2026.
In parallel, Northland has initiated coverage on Abacus Life shares with an Outperform rating and a price target of $13.50, indicating confidence in the company's future growth.
In addition to these financial developments, Abacus Life reported strong financial results for the quarter ending June 30, 2024, with over $100 million in investments. The company also expanded its assets under management through the strategic acquisitions of FCF Advisors and Carlisle Management Company SCA, which are projected to significantly increase its AUM.
Lastly, the company has appointed Elena Plesco as its new Chief Capital Officer, signaling a focus on capital management strategies and global expansion efforts. These are the recent developments for Abacus Life Inc.
InvestingPro Insights
Recent InvestingPro data provides additional context to Abacus Life Inc.'s (NASDAQ: ABL) financial position and market performance. The company's market capitalization stands at $563.82 million, with a revenue of $102.41 million for the last twelve months as of Q3 2024. Notably, Abacus Life has demonstrated strong revenue growth, with a 77.68% increase over the same period.
Despite the positive outlook from B.Riley and the recent capital raise, InvestingPro Tips highlight some challenges. The stock has experienced significant price declines, with a 26.7% drop over the last three months and a 29.44% decrease over the past six months. This aligns with the analyst's observation about favorable market conditions for the equity issuance, potentially allowing the company to capitalize on the current market dynamics.
An InvestingPro Tip suggests that Abacus Life is "quickly burning through cash," which could explain the recent $100 million common stock offering mentioned in the article. This capital raise may help address the cash burn rate and support the company's growth strategy, particularly in policy acquisitions.
Another relevant InvestingPro Tip indicates that analysts predict the company will be profitable this year. This projection corresponds with the increased EPS estimates provided by the B.Riley analyst, supporting the optimistic outlook for Abacus Life's financial performance.
For investors seeking a more comprehensive analysis, InvestingPro offers 8 additional tips for Abacus Life, providing a deeper understanding of the company's financial health and market position.
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