MetLife nears fair value and rate cuts to add pressure

Investing.com --Piper Sandler downgraded MetLife to Neutral from Overweight, saying the stock has little upside left after its recent rally and faces headwinds from falling interest rates.

The brokerage said shares are now trading within 10% of its $84 price target, which is based on 8.5 times projected 2026 earnings, roughly in line with the life insurance sector.

Piper added that many of MetLife’s key catalysts are already priced in, including the creation of its Chariot Re reinsurance vehicle and the planned breakout of its investment management arm following the PineBridge acquisition.

“We believe these catalysts have come and gone, and are well understood,” the firm said.

The note also flagged risks from a lower rate environment, which could heighten competition in institutional spread businesses such as pension risk transfers, where alternative asset managers and mutual insurers are deploying more capital.

Lower rates may eventually revive real estate activity and lift variable investment income, but Piper said any benefit is likely to take several quarters to materialize.

MetLife shares are up strongly this year, helped by steady execution and capital management, but Piper said the combination of limited valuation upside and intensifying competition leaves the stock fairly valued.

“With the prospect for lower rates, we believe this will increase competition in the institutional spread manufacturing landscape at a time of more capital coming into the marketplace from both alternative asset managers and mutuals,” analysts said.

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