Legal Uncertainty Weighs On Metlife Shares

Argus analyst Jacob Kilstein believes Metlife Inc (NYSE: MET) shares face uncertainty following the Treasury Department's move to appeal a federal judge decision to rescind the company's SIFI designation. The analyst feels rescinding the SIFI status would free up capital, and such capital could be used to return to shareholders and enhance operations.

The brokerage believes the stock looks favorably valued compared to rivals, after Metlife shares dropped approximately 10 percent after January. Argus reiterated its Buy rating and price objective of $54 on the company's shares, implying 9.3 times multiple of its EPS estimate of 2017.

The lead analyst believes Metlife merits increased multiple and that it has a steady dividend growth offering about 3.7 percent yield.

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In a research note to clients, the brokerage said, "After poor 2Q16 results, management said that it would cut costs by 11 percent, saving $1 billion annually by 2019. Second-quarter revenue and earnings were hurt by actuarial reserve adjustments, low interest rates, global equity weakness, and a strong dollar."

The lead analyst has a positive view on the insurance service provider's initiatives globally, apart from the diversification in business. Argus pointed out that the company intends to split the retail unit through a sale, spinoff or IPO in the second half of the current year.

At time of writing, Metlife was down 0.69 percent at $42.96.

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