Deutsche Bank (ETR:DBKGn) has revised its price target for Corebridge Financial (NYSE: CRBG) shares, raising it to $33.00 from the previous $24.00.
The firm has decided to maintain a Hold rating on the stock. This adjustment comes in the wake of Corebridge Financial's second-quarter results for the fiscal year 2024, which prompted a slight revision of the bank's financial estimates for the company.
The analyst at Deutsche Bank noted that after reviewing the company's performance, there was an approximate 1% adjustment to their projections for 2024 and 2025.
Additionally, the firm introduced its operating earnings per share (EPS) estimate for 2026 at $6.58. The increase in the price target reflects a shift in the valuation methodology, moving from the 2024 to 2025 estimates.
The valuation of Corebridge Financial by Deutsche Bank employs a price-to-earnings (P/E) based sum-of-the-parts model. This approach involves estimating a P/E multiple for each segment of the company, informed by the valuations of peers and adjusted by a qualitative assessment of each franchise's underlying quality.
The multiples are applied to the firm's 2025 estimates for each segment, and a sum-of-the-parts discount is used to arrive at the final price target.
The analyst highlighted several risks that could potentially undermine their Hold recommendation. These include possible declines in Commercial Real Estate, sharp downturns in equity or debt markets, unexpected increases in unemployment, and a slower-than-anticipated sell-down from AIG.
Corebridge reported a significant increase in operating results for Q2 2024. The company's operating earnings per share rose by 9% year-over-year, and a 17% increase from the previous year was observed in premiums and deposits, totaling $11.7 billion. Corebridge also reported a 5% growth in aggregate core sources of income, including base spread income, fee income, and underwriting margin.
In a strategic move, Corebridge Financial has entered into a share repurchase agreement with American International Group, Inc. (NYSE:AIG), planning to buy back shares for an aggregate purchase price of around $200 million. This share repurchase reflects the company's financial strategies and its commitment to managing shareholder value.
InvestingPro Insights
As Corebridge Financial (NYSE:CRBG) continues to navigate the ever-changing financial landscape, recent data from InvestingPro provides a deeper understanding of the company's current standing. The market capitalization of Corebridge Financial stands at a robust $16.8 billion, reflecting its significant presence in the industry. In terms of valuation metrics, the company's P/E ratio is currently at an attractive 7.69, which is quite favorable compared to the adjusted P/E ratio for the last twelve months as of Q2 2024, coming in at 13.06. This suggests that the stock might be undervalued based on its earnings.
InvestingPro Tips highlight that management's aggressive share buyback strategy could be a sign of confidence in the company's future prospects. Additionally, analysts predict profitability for the current year, which is corroborated by Corebridge Financial's performance over the last twelve months. However, it is important to note that six analysts have revised their earnings expectations downwards for the upcoming period, indicating potential headwinds or a more conservative outlook. Furthermore, the company's significant dividend yield of 7.33% as of the latest data, coupled with a substantial dividend growth of 126.09% over the last twelve months, makes it an attractive option for income-focused investors.
While the company's gross profit margins appear to be weak at 22.42%, Corebridge Financial has experienced a high return over the last year, with a year-to-date price total return of 33.25% and a one-year price total return of 75.05%. These figures suggest that despite some challenges, the company has delivered strong returns to shareholders. For those interested in further insights, there are additional InvestingPro Tips available on the platform, offering a comprehensive analysis that could guide investment decisions.
For more detailed analysis and tips, investors can explore the full suite of 8 InvestingPro Tips for Corebridge Financial at https://www.investing.com/pro/CRBG, providing a more nuanced view of the company's financial health and future outlook.
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