Reinsurance Group of America (RGA) is facing divergent analyst assessments as financial institutions reassess the company’s growth trajectory. While J.P. Morgan has upgraded RGA’s rating to “overweight,” UBS has taken a more cautious stance, shifting its rating to “neutral.” The company’s stock recently experienced a 0.7% decline, reflecting the broader uncertainty in the market.
Despite the mixed ratings, RGA recently secured a transformative agreement with Equitable Holdings (EQH) to reinsure 75% of a life insurance block, encompassing approximately $18 billion of general account reserves. The transaction is anticipated to close in mid-2025, pending regulatory approvals and customary closing conditions. To finance this transaction, RGA priced $700 million of subordinated debentures.
This deal is expected to enhance RGA’s annual pre-tax income by approximately $200 million, positioning the company for long-term financial growth and capital deployment. However, RGA’s stock has seen an 8.7% decline over the past six months.
Wall Street analysts maintain an optimistic outlook on RGA’s stock, with 10 prominent analysts setting a one-year average price target of $253.30. The highest target price is $285.00, while the lowest projection stands at $224.00. This suggests a potential upside of 27.4% from the current stock price of $198.83.
Further supporting a positive outlook, an analysis of 12 brokerage firms reveals that RGA’s average recommendation is 2.0, categorizing it as an “outperform.” This rating is derived from a scale where 1 represents a “strong buy” and 5 indicates a “sell” recommendation.
According to GuruFocus estimates, RGA’s GF Value—a metric evaluating fair market value—stands at $220.74. This represents a projected upside of 11.02% from the current price. The GF Value calculation takes into account historical trading multiples, past business growth, and future performance projections.
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