Thursday, CFRA, a financial research firm, adjusted its outlook on Globe Life Inc. (NYSE: NYSE:GL) shares, reducing the price target from $136.00 to $118.00, while keeping a Hold rating.
The revised target price represents a valuation of 10.3 times the firm's 2024 operating earnings per share (EPS) estimate of $11.50 and 9.6 times the 2025 operating EPS estimate of $12.25. This adjustment comes in light of Globe Life's performance and market position relative to its peers.
The rationale behind the new price target is grounded in the expectation that Globe Life will achieve operating revenue growth of 4%-6% in 2024 and 3%-7% in 2025. These projections are slightly above the industry averages. In the previous year, Globe Life's life insurance premiums increased by 3.6%, and the company is anticipated to see a growth of 4%-7% in the current year.
However, concerns have been raised that if inflationary pressures continue to affect Globe Life's middle-income target market, sales could potentially decline as consumers adjust their spending in response to higher costs, including those associated with auto insurance.
The company's health insurance premiums saw a 2.8% rise in 2023, with expectations for a 3%-5% growth in 2024. However, this segment faces increased competition which could impact the company's performance. CFRA's assessment also takes into account Globe Life's risk profile, which is considered below-peer due to the straightforward nature of many of its insurance products.
The firm's analysis suggests that, when balancing the risk profile and the stock's premium valuation compared to its industry peers, Globe Life shares are deemed to be fairly valued at the current price level.
InvestingPro Insights
In the context of CFRA's updated valuation on Globe Life Inc. (NYSE: GL), real-time data from InvestingPro provides a broader picture of the company's financial health and market performance. With a market capitalization of approximately $9.87 billion and a P/E ratio of 10.15 for the last twelve months as of Q4 2023, Globe Life is trading at a relatively low multiple, which could be appealing to value investors. The company's revenue growth of 4.22% over the same period aligns with CFRA's projections, indicating a stable upward trend.
Two InvestingPro Tips that may be particularly relevant for investors are that Globe Life has raised its dividend for 8 consecutive years, signaling a commitment to returning value to shareholders, and the stock is trading near its 52-week low, potentially offering an attractive entry point. These insights suggest that despite recent price dips, as indicated by a 1-month total return of -12.76%, the company's fundamentals, including a dividend growth of 15.66% in the last twelve months, remain strong.
For those looking to delve deeper into Globe Life's investment potential, more InvestingPro Tips are available, which could guide investment decisions. To access the full range of insights, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro. There are 6 additional tips listed in InvestingPro for Globe Life, which can provide a more comprehensive understanding of the stock's prospects.
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