Credit Suisse Upgrade 11:48 AM EDT, 08/10/2020 (MT Newswires) -- Credit Suisse has kept its Outperform rating and raised its one year price target by $1, to $60 on Sun Life Financial. SLF reported a solid Q2 as underlying EPS of $1.26 which beat CS's estimate of $1.14 and consensus of $1.12. Underlying ROE in the quarter was 13.4%, while Sun Life Assurance's LICAT ratio ended the quarter at 126%.
From a source of earnings basis, expected profit was up 11% from the prior year with double-digit growth in the Canada and US operating segments, which management attributed to both wide spread business growth and discipline on operating expenses. MFC's comparable growth rate in expected profit at the consolidated level was a more modest 7% this quarter, while GWO reported a flat result from last year, CS notes.
Some other notables in the quarter included: 1) SLF had a $58 million after-tax credit charge related to downgrades and impairments in Q2, which was not a material hit to earnings although we do expect more credit-related noise in the coming quarters given the very challenging macroeconomic outlook; 2) yield enhancement was once again outsized totaling $97 million after-tax in Q2, which was ~$60 million higher than a normal run-rate and is expected to subside in the near-term; and 3) SLF will be expanding further into Asia as the company has obtained an insurance license to operate in Singapore where the focus will be on high net worth clients, with operations expected to commence in early 2021.
For F2020 CS now estimates $5.05 (was $4.79), while for F2021, CS expects $5.43 (was $5.28).
(MT Newswires covers equity, commodity and economic research from major banks and research firms in North America, Asia and Europe. Research providers may contact us here: https://www.mtnewswires.com/contact-us)
Price: 55.67, Change: +0.67, Percent Change: +1.22