On Wednesday, Barclays began coverage on FGL Holdings (NYSE:FG_old) (NYSE:FG) with an Equalweight rating and set a price target of $45.00. The firm's stance on the insurance holding company is influenced by a combination of factors that include both positive growth prospects and potential risks.
The analyst from Barclays highlighted the favorable growth profile of FGL Holdings, noting the company's recent expansion in its capabilities, which now include Retirement Income Liability (RILA) offerings and Pension Risk Transfer (PRT) capabilities. These developments are seen as providing FGL with an attractive growth trajectory.
Moreover, the partnership with Blackstone (NYSE:BX) is viewed as a continuing benefit for FGL Holdings. The collaboration is particularly advantageous because it grants FGL access to direct loan origination capabilities, which can be a significant asset for the company.
Despite the positive growth outlook, there are concerns regarding FGL Holdings' risk profile. The company's higher invested asset risk profile and a larger allocation to private debt were pointed out as factors that could make the company's equity story more vulnerable, especially over the next 12 months. This aspect of risk tempers the firm's enthusiasm about FGL's growth prospects.
In summary, while Barclays acknowledges the potential for return on equity (ROE) improvement and business growth for FGL Holdings in the coming years, the firm's cautious stance reflects a balanced view of the opportunities and risks present in the current environment. The Equalweight rating suggests that Barclays sees FGL Holdings as adequately valued at the time of the report.
In other recent news, F&G reported a robust Q2, with a focus on growth and distribution. The company's adjusted net earnings for the quarter were $139 million, equivalent to $1.10 per share, bolstered by record gross sales of $4.4 billion.
F&G's strategic investments in its distribution channels, such as an increased stake in Freedom Equity Group, are contributing to margin growth and positioning the firm for sustained asset growth and margin expansion. The company is on track to meet its target of 50% assets under management (AUM) growth by 2028.
F&G aims for double-digit annual growth in the medium term and is focused on meeting retirement needs and serving underserved market segments. Despite a strong pipeline, a decline in interest rates is not expected to significantly impact the pension risk transfer business. The company is also targeting a younger demographic with its RILA products, expecting significant growth by 2025.
InvestingPro Insights
Adding to the analysis provided by Barclays, InvestingPro data and tips offer additional insight into FGL Holdings' financial health and future prospects. With a market capitalization of $5.33 billion and a robust revenue growth of 44.53% over the last twelve months as of Q2 2024, FGL Holdings demonstrates a strong capacity for expansion in its market. The company's P/E ratio stands at 16.46, which aligns with industry standards, indicating a fair valuation relative to its earnings.
Two InvestingPro Tips further enrich the perspective on FGL Holdings. Firstly, the company is expected to see net income growth this year, which is a positive indicator of its profitability trajectory. Additionally, FGL Holdings has shown a strong return over the last five years, which may instill confidence in long-term investors considering the company's track record of performance.
For readers seeking a deeper dive into FGL Holdings' financial metrics and strategic outlook, InvestingPro offers additional tips and real-time data. Currently, there are over 10 additional InvestingPro Tips available at https://www.investing.com/pro/FG, which can provide investors with a more comprehensive understanding of the company's potential.
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