On Friday, Brighthouse Financial , Inc. (NASDAQ:BHF) saw its stock price target reduced from $55.00 to $50.00 by Piper Sandler, while the firm kept a Neutral rating on the stock.
The adjustment comes amidst a lack of a definitive timeline for distributable earnings scenarios, which have shifted from a March to September schedule due to accounting changes. The company is expected to experience a decline in fixed annuity sales following a change in reinsurers.
Brighthouse Financial is also anticipated to face challenges with its registered indexed linked annuity (RILA) product. As a first-generation market participant in the RILA space, the company may need to update its offerings due to increased competition from new products based on a fixed index annuity framework with financial sponsor investment management.
The analyst noted that the current environment of increased outflows seems unlikely to change in the near term. This outlook has influenced the decision to maintain a Neutral stance on Brighthouse Financial's shares. The revised stock price target reflects a lower earnings multiple, decreasing to 2.6x from the previous 2.9x, which takes into account the heightened surrender activity within the company's product lines.
The ongoing adjustments and market pressures underscore the challenges facing Brighthouse Financial as it navigates a competitive and evolving annuity landscape. The company's performance and strategic responses in the coming months will be closely watched by investors and industry analysts alike.
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