In a report released yesterday, Tom Mackinnon from BMO Capital maintained a Hold rating on Manulife Financial (MFC – Research Report), with a price target of C$29.00.
Tom Mackinnon has given his Hold rating due to a combination of factors. He acknowledges that Manulife Financial had a strong Q3/23, but this hasn’t significantly altered the overall outlook. Despite the positive quarter, Mackinnon acknowledges potential headwinds due to Manulife’s reliance on non-fixed income assets and its lower organic capital generation relative to its core earnings. These factors could hinder future multiple expansion.
Furthermore, Mackinnon notes that although Manulife’s core earnings per share (EPS) exceeded estimates, this was partly due to better policyholder experience gains and better Global Wealth and Asset Management (GWAM) performance, which can be inconsistent. Additionally, Manulife’s reported EPS were lower than core, largely due to larger-than-expected market-to-market losses on alternative long-duration assets (ALDA) and interest rate impacts. Mackinnon also points towards a degree of uncertainty around how Manulife’s Key Performance Indicators (KPIs) will unfold in 2023 under IFRS17, specifically referring to the contractual service margin (CSM) and the annual excess capital generation. He suggests that an overreliance on expected returns from ALDA and public assets could lead to volatility in reported and lower quality core EPS.
In another report released yesterday, National Bank also maintained a Hold rating on the stock with a C$27.00 price target.
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Based on the recent corporate insider activity of 161 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of MFC in relation to earlier this year.
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Manulife Financial (MFC) Company Description:
Canada-based Manulife Financial Corp. is a financial services company, which provides financial advice, insurance and wealth and asset management products and services in Asia, Canada, the United States, and other international markets.
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