On Friday, Piper Sandler adjusted its price target for Globe Life Inc. (NYSE:NYSE:GL) to $106 from the previous $105, while reaffirming its Overweight rating on the stock.
The firm's decision follows a performance review that highlighted robust health segment earnings and a solid distribution network in both Life and Health sectors. The company's agents and sales have shown strength, contributing to an increase in the 2024 earnings per share (EPS) guidance.
The review indicated that Globe Life has been cooperative with ongoing inquiries from the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC), although no further developments have been reported. The analyst from Piper Sandler believes that the inquiries could continue to be a factor for the company over the next few quarters.
In addition to addressing regulatory matters, Globe Life is actively working on capital management strategies. The company aims to unlock significant capital, targeting an authorization of $1.3 billion by the end of 2025, as announced at the end of April.
Among the planned initiatives is an additional $400 million in debt authorization slated for the second half of 2024, and the potential establishment of a Bermuda-based entity.
Piper Sandler also noted that Globe Life has been benefiting from re-measurement gains, with the third quarter of 2024 expected to serve as a catalyst due to the annual actuarial assumption review and the establishment of 2025 guidance. The full report by Piper Sandler contains additional information on the company's performance and outlook.
In other recent news, Globe Life Inc. reported a 20% increase in net income, reaching $258 million in its second quarter 2024 earnings call. The company also highlighted a rise in return on equity, reaching 20.8%, and a book value per share of $58.06.
Despite allegations of financial misconduct, an independent audit found no need for adjustments to the company's financial statements. However, inquiries into the company's sales practices by the SEC and the DOJ are still ongoing.
Globe Life saw an increase in premium revenues for both life and health insurance, with expectations for continued growth. In addition, the company's investment operations performed well, as excess investment income rose to $43 million, marking an $11 million increase from the previous year. Despite these positive developments, the company is still dealing with legal expenses due to ongoing investigations, and certain mortality trends remain elevated.
In terms of future expectations, analysts project a growth in life premium revenue between 4.5% and 5% for the year, health premium revenue growth of approximately 6.5% to 7%, and a 7% to 8% increase in net investment income. Operating earnings per diluted share are estimated to fall between $11.80 and $12.10 for 2024.
InvestingPro Insights
Following Piper Sandler's updated analysis on Globe Life Inc., InvestingPro data provides a deeper financial perspective on the company. With a market capitalization of $8.02 billion and a P/E ratio standing at 8.02, Globe Life presents a compelling value proposition, especially when considering the adjusted P/E ratio for the last twelve months as of Q2 2024, which is even lower at 7.67. Additionally, the PEG ratio for the same period is 0.47, indicating potential for growth relative to its earnings.
InvestingPro Tips highlight that Globe Life has not only maintained its dividend payments for an impressive 54 consecutive years but has also raised them for 8 consecutive years, showcasing a strong commitment to shareholder returns. Moreover, the company has been recognized for its robust performance over the last three months, with a 17.94% total return, signaling a positive trend amidst the recent market volatility.
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