Analysts are giving mixed reviews to Sun Life Financial Inc.’s latest quarterly results.
BMO raised its target price to C$79 from C$78, but RBC cut its target price to C$76 from C$79 and Credit Suisse dropped its target to $77 from $79.
Sun Life reported underlying earnings per share of C$1.57 in its second quarter, which was modestly above the Street estimate of C$1.54.
But Credit Suisse analyst Joo Ho Kim, who has an “outperform” rating on the stock, wasn’t all that impressed by the quality of the beat.
“Although SLF delivered a beat against both the Street estimate and our forecast, the strength was largely driven by better than expected Experience Gains, a DOE line that tends to fluctuate quarter-to-quarter relative to other lines. While it could be argued that a track record of favorable experience reflects good underwriting capabilities, we don’t believe that the full benefit of this quarter’s results will be reflected in the forward estimates. On the positive side, we saw good momentum continuing in Asia in terms of earnings (up 25% Y/Y) and sales growth, some of which flowed through to CSM (up 14% Y/Y or 6% on organic growth alone). Lastly balance sheet strength continued for SLF this quarter, with a solid level of capital generation that should lend to better optionality (including the new NCIB) vs. peers going forward,” the Credit Suisse analyst said in a note.