On Monday, Piper Sandler maintained its Overweight rating on Voya Financial (NYSE:VOYA) shares, with a steady price target of $84.00. The firm's perspective on the company was shared following investor meetings with Voya Financial's top executives, including CEO Heather Lavallee and the incoming CFO Mike Katz.
The discussions highlighted Voya Financial's progress into the third phase of its existence as a public company. The firm anticipates significant improvements in medical stop loss performance, expected after the re-pricing at the beginning of 2025, which will affect 80% of the book.
Voya's Investment Management (IM) and Wealth distribution sectors have reportedly outperformed those of other life insurers with substantial asset management operations. Piper Sandler noted this as a distinct advantage for Voya Financial.
Moreover, Voya Financial's strategy to start pre-announcing variable investment income (VII) was pointed out as a potential trendsetter within the industry. This approach may be adopted by others when current headwinds shift to tailwinds.
In terms of valuation, Voya Financial is considered by Piper Sandler to be particularly attractive among fee-focused companies within their coverage area. The firm sees multiple catalysts for Voya Financial, including the positive reception of the OneAmerica transaction.
In other recent news, Voya Financial successfully issued $400 million in senior notes due 2034, which are fully and unconditionally guaranteed by Voya Holdings Inc., a wholly-owned subsidiary of Voya Financial. The company also recently agreed to acquire OneAmerica Financial Partners' retirement recordkeeping business, a strategic move expected to expand Voya's footprint in the retirement planning sector. The deal involves Voya paying an upfront consideration of $50 million, with additional contingent consideration of up to $160 million based on retained revenues and performance of transition services.
On the analyst front, Evercore ISI maintained an Outperform rating on Voya's stock and increased its price target to $82.00, anticipating that the deal will contribute over $75 million in pretax earnings and over $200 million in net revenue one year after closing. However, Morgan Stanley downgraded Voya's stock from Overweight to Equalweight due to concerns about the performance of the Health Solutions segment.
In other developments, Voya Financial recently announced the appointment of Michael Katz as the new CFO, set to take his position on January 1, 2025. Piper Sandler reaffirmed its Overweight rating and $84.00 stock price target for Voya, following the announcement of Katz's appointment. Barclays initiated coverage on Voya Financial, issuing an Overweight rating based on the assessment that Voya has been generating strong and consistent cash flow.
InvestingPro Insights
Following Piper Sandler's optimistic outlook on Voya Financial, InvestingPro data further substantiates the company's strong position. Voya Financial's market capitalization stands at $7.53 billion, reflecting a robust presence in the financial sector. Notably, the company's Price/Earnings (P/E) ratio is at 9.84, which, when adjusted for the last twelve months as of Q2 2024, shows an even more attractive value at 8.58. This is particularly compelling when paired with the company's PEG ratio of 0.23 for the same period, suggesting that Voya's shares could be undervalued relative to its earnings growth.
InvestingPro Tips highlight that Voya Financial has been consistently rewarding shareholders, raising its dividend for 6 consecutive years and maintaining dividend payments for 12 consecutive years. Additionally, the company's liquid assets surpass its short-term obligations, indicating a strong liquidity position. For readers interested in a deeper dive into Voya Financial's performance and potential, InvestingPro offers a wealth of additional tips, with 7 more available that provide further insights into the company's strategic moves and market standing.
With a forward-looking dividend yield of 2.35% and a dividend growth of 125% in the last twelve months as of Q2 2024, Voya Financial demonstrates a commitment to returning value to its shareholders. The company's share price is also trading near its 52-week high, at 98.08% of the peak, which aligns with Piper Sandler's maintained Overweight rating and $84.00 price target. Investors seeking to capitalize on Voya Financial's potential can find a comprehensive analysis and additional InvestingPro Tips at https://www.investing.com/pro/VOYA.
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