Joshua Shanker, an analyst from Bank of America Securities, reiterated the Buy rating on AFLAC (AFL – Research Report). The associated price target was raised to $115.00.
Joshua Shanker has given his Buy rating due to a combination of factors including the recent appreciation of the Japanese Yen and Aflac’s strategic financial maneuvers. Following a significant low, the Yen has recovered approximately 10% against the U.S. Dollar, which bodes well for Aflac given that a large portion of its revenue is generated in Japan. This currency shift is expected to translate into a positive uptick in Aflac’s revenue projections, transitioning from a forecasted decline in dollar-denominated earnings from the Japan segment to an anticipated growth. Although Aflac has employed a rigorous hedging strategy against Yen fluctuations, the impact on earnings is somewhat tempered, ensuring that the bottom line isn’t excessively affected by currency volatility.
The adjusted earnings per share (EPS) forecast is modestly increased, taking into account the stronger Yen’s effect on both revenue and expenses, which are significantly hedged. Moreover, Aflac’s decision to transfer a greater portion of its Japan-exposed risk to its Bermuda entity is set to yield a higher investment return on the offshored float and permit increased capital return to shareholders. Consequently, Shanker anticipates a $4 billion annual return of capital to shareholders over the next few years. The price objective has been raised to $115, reflecting slight enhancements in EPS estimates and the expectation of sustained outperformance, especially following the company’s strong second quarter results in 2024. Despite concerns over Aflac’s ties to transitional commercial real estate, Shanker foresees this issue diminishing, particularly in a potentially lower interest rate environment, which could make the investment less risky and more attractive to investors.
According to TipRanks, Shanker is a 5-star analyst with an average return of 10.9% and a 64.46% success rate. Shanker covers the Financial sector, focusing on stocks such as Progressive, AFLAC, and Allstate.
TipRanks tracks over 100,000 company insiders, identifying the select few who excel in timing their transactions. By upgrading to TipRanks Premium, you will gain access to this exclusive data and discover crucial insights to guide your investment decisions. Begin your TipRanks Premium journey today.
AFLAC (AFL) Company Description:
Georgia-based Aflac, Inc. was founded in 1955. The company provides supplement health and life insurance products. It operates through two segments, Aflac Japan and Aflac U.S.
