MetLife (MET) Might Be Buying Opportunity Following $10B Offering - Barron's
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MetLife (NYSE: MET) is trading stronger this morning, as Barron's is bullish on the stock following $10 billion in offerings by the company last week.
Last week, MET and American International Group (NYSE: AIG) offered $6.4 billion in common stock, and $3.3 billion in convertible securities. The offering stemmed from the $16 billion acquisition of Alico by MetLife in 2010.
One Morgan Stanley analyst is bullish on the shares, saying that MetLife has one of the strongest outlooks in the industry, and is also attractively priced considering its strong ROE. The analyst believes that ROE could increase from 10% in 2010 to 12% in 2012, bolstered by the Alico acquisition.
On the opposite side of the argument, some believe that MetLife is a slow-growth company in a highly competitive industry. It's $451 billion investment portfolio includes about $50 billion of commercial-mortgage loans, which makes it susceptible to market downturns.
Moving forward, the potential for a dividend boost or stock buyback may be in the works. MetLife is currently awaiting stress-test results before dolling out a portion of its $6 billion in excess capital (estimated by Morgan Stanley). The company currently pays-out $0.185 per share per quarter, yielding 1.6% annually. Morgan Stanley is looking fr $1 billion in buybacks through 2011.
Barron's notes that MetLife's Convertible Securities offer an attractive alternative to the common shares. The shares were sold for $83 and yield about 4.5%. The shares will also be convertible in FY12 - FY14, leaving them with am average life of 2.5 years. Investors could receive $75 of stock if MetLife trades between $35 - $44, and more if shares break $44.
MetLife shares are up 0.9% today, to $45.98.
Last week, MET and American International Group (NYSE: AIG) offered $6.4 billion in common stock, and $3.3 billion in convertible securities. The offering stemmed from the $16 billion acquisition of Alico by MetLife in 2010.
One Morgan Stanley analyst is bullish on the shares, saying that MetLife has one of the strongest outlooks in the industry, and is also attractively priced considering its strong ROE. The analyst believes that ROE could increase from 10% in 2010 to 12% in 2012, bolstered by the Alico acquisition.
On the opposite side of the argument, some believe that MetLife is a slow-growth company in a highly competitive industry. It's $451 billion investment portfolio includes about $50 billion of commercial-mortgage loans, which makes it susceptible to market downturns.
Moving forward, the potential for a dividend boost or stock buyback may be in the works. MetLife is currently awaiting stress-test results before dolling out a portion of its $6 billion in excess capital (estimated by Morgan Stanley). The company currently pays-out $0.185 per share per quarter, yielding 1.6% annually. Morgan Stanley is looking fr $1 billion in buybacks through 2011.
Barron's notes that MetLife's Convertible Securities offer an attractive alternative to the common shares. The shares were sold for $83 and yield about 4.5%. The shares will also be convertible in FY12 - FY14, leaving them with am average life of 2.5 years. Investors could receive $75 of stock if MetLife trades between $35 - $44, and more if shares break $44.
MetLife shares are up 0.9% today, to $45.98.
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