Manulife Financial Corp T.MFC

TD action list best buys for 2022

[Blueswin]

Manulife Financial Corp. MFC-T: C$24.90; ACTION LIST BUY 12-Month Target: C$37.00 We continue to believe that the material discount ascribed to MFC presents an attractive opportunity for investors, as the business is well-positioned to capitalize on the themes affecting the industry (namely higher interest rates) and has attractive growth opportunities. At its 2021 investor day (report), management laid out targets of growing their highest growth potential businesses (Asia and Global WAM) to 75% of total core earnings by 2025 (from 62% in 2020), and 50% of earnings from Insurance and Wealth Management. Asia (including the wealth component) is expected to contribute 50% of total company core earnings by 2025. Following Q1/21 earnings, we did a deep dive (report) on MFC to answer the question, "is there a systemic issue with MFC's book value growth?" What we discovered in our analysis is that over the long term, SLF and MFC's BVPS growth ends up at approximately the same point, however, MFC gets there with materially more volatility. Having said that, MFC trades at 1.0x P/B compared to SLF trading at 1.8x, representing an ~45% discount. With MFC working its way toward delivering less book value and reported earnings volatility, as well as the recent transaction regarding the legacy VA block, we believe MFC's discount valuation more than adequately supports our positive outlook on the stock. While core earnings were down 7% y/y in 2020 (weakest of the group), we believe MFC is positioned for a strong recovery in 2021 (forecast EPS growth of 17% vs. group average of 16%) with continued momentum into 2022 (forecast EPS growth of 11% vs. group average of 9%). Importantly, the company has significantly reduced its equity market and interest rate sensitivity since the GFC, and is now arguably a much stronger and more stable business model. Our positive outlook on MFC reflects: a) greater confidence that the legacy businesses will not result in material hits to reported earnings and capital strength; b) a strong capital ratio from the perspective of LICAT and core LICAT; c) businesses that should support growth and an improving ROE – Asian Insurance and WAM; and d) valuation. We rate the stock ACTION LIST BUY and maintain our $37.00 target price.

[newcoin]

That is huge!! Trading at $25.52 now. What a great recommendation. Amazing if it happens.

[Marcus319]

Hey Newcoin Good to see you have money in Manulife. From a fellow investor in Brax isn't it good to not have to respond to the likes of cautiousguy and those goofs on this board.  Good luck. Have held shares in Manulife for years. 

[newcoin]

Hi Marcus, Yes, good to have some sense in these boards. MFC certainly more bluechip than BRAX. This seems to be a great board w/o manipulators. I can only take so much of nauseousguy. I have great expectations of MFC.