On Wednesday, RBC Capital Markets adjusted its outlook on Voya Financial (NYSE:VOYA), reducing the price target from $95.00 to $90.00, but retained an Outperform rating on the company's shares. The revision comes amid a challenging period for the stock, which has declined nearly 12% in the past week to $72.21.
According to InvestingPro data, the stock's RSI suggests it's currently in oversold territory. The revision comes after the firm reviewed the latest updates provided by Voya Financial's management regarding the January 2024 stop-loss block loss trends.
The analyst from RBC Capital noted that the expected loss ratios presented by Voya Financial's management were significantly higher than previously anticipated. Despite this, the analyst pointed out that there is now more claims data available to back the management's revised projections, which adds credibility to the updated figures. InvestingPro analysis shows that Voya maintains strong financial health with a current ratio of 8.71, indicating robust liquidity with assets well exceeding short-term obligations.
Voya Financial's business model, which is characterized by being capital-light and generating high free cash flow, continues to be favored by RBC Capital. The firm also sees potential for organic growth opportunities within the company. The analyst expressed confidence that Voya Financial could experience a normalization of its business by 2026 due to the annual renewal and repricing dynamics.
In the statement, the analyst remarked, "We are revising our EPS estimates to factor in management's disclosed update on its January 2024 stop-loss block loss trends. While mgmt's expected loss ratios are much higher than we previously modelled, there is more claims data to support mgmt's latest projections; and we still believe VOYA could see normalization of the business in 2026, given annual renewal/repricing dynamics."
RBC Capital's maintained Outperform rating indicates their positive stance on Voya Financial's stock performance prospects, despite the adjustment in the price target. The firm's decision to revise the price target to $90 reflects the new information and data provided by Voya Financial's management. InvestingPro analysis suggests the stock is currently undervalued, with 8 additional real-time insights available to subscribers. The company maintains a solid dividend track record, having raised dividends for 6 consecutive years, with a current yield of 2.49%.
In other recent news, Voya Financial has been the subject of several adjustments by financial analysts. BofA Securities downgraded the company's rating from Buy to Neutral and reduced its price target from $91 to $83, following Voya's announcement of an anticipated significant loss ratio for the fourth quarter of 2024. This was due to the performance of its medical stop-loss business, a development that led to a revision in earnings expectations by eight analysts.
Voya Financial also announced the expected departure of Rob Grubka, head of the health and wealth business, which has been noted as a key factor in the company's future performance. Despite these challenges, the company has reported strong revenue growth of 10.94% over the past twelve months.
Evercore ISI and Keefe, Bruyette & Woods have also revised their price targets for Voya Financial to $89 and $92 respectively, while maintaining an Outperform rating. RBC Capital and Piper Sandler adjusted their outlook on Voya Financial as well, increasing their price targets to $95 and $91 respectively.
In parallel, HDFC Bank has appointed an additional independent director to its board, in line with the corporate governance standards expected of companies listed on international stock exchanges.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.