In a report released today, Bob Huang from Morgan Stanley maintained a Hold rating on Primerica (PRI – Research Report), with a price target of $296.00.
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Bob Huang has given his Hold rating due to a combination of factors that reflect both strengths and limitations in Primerica’s current market position. The company showcases a robust distribution model with low balance sheet risk, strong earnings growth, and impressive return on equity (ROE) and free cash flow (FCF) conversions. These factors suggest a durable long-term growth trajectory, with potential for superior valuation upside.
However, despite these strengths, Primerica trades at a significant discount compared to its peers in the insurance and investment brokerage sectors. While the company has shown strong EPS growth and capital returns, its capital-light business model and high RBC ratio raise questions about the necessity of maintaining such a high capital cushion. These considerations, along with the macroeconomic environment’s potential impact, contribute to the Hold rating, as the stock’s current valuation may already reflect these positive attributes.
Huang covers the Financial sector, focusing on stocks such as Progressive, Allstate, and Renaissancere Holdings. According to TipRanks, Huang has an average return of 1.2% and a 60.42% success rate on recommended stocks.