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Look For MetLife To Soon Be A High-Yielding Standout Among Large-Cap Financials

MET | May 25, 2017

Analysts at FBR & Co. upgraded shares of Metlife Inc (NYSE: MET) as the stock's underperformance versus its peers since the start of 2017 has now created a compelling buying opportunity.

FBR's Randy Binner upgraded MetLife's stock from Market Perform to Outperform with a price target boosted from $54 from $58. The analyst noted MetLife's recent weakness in its earnings report, the delay of the Brighthouse spin and "derivative noise" plagued the stock over the past few months.

Why Upgrade?

The analyst has turned bullish on the stock after the first-quarter earnings report showed an improvement in the business. Binner thinks the Brighthouse spin is "moving forward."

Binner added that his bullish stance is only based on his belief that the stock will be offering an approximate 3.8 percent dividend yield. This will also prove to be a "standout" among large-cap financials and this a major benefit for investors in the ongoing low interest environment.

However, Binner did caution that his report is "still an imprecise exercise" and investors have reason to remain in a "wait-and-see mode." Nevertheless, the analyst believes the stock has limited downside as it is currently trading at a 1.0x book value ex-AOCI (accumulated other comprehensive income).

Bottom line, MetLife's recent earnings report has been more volatile than its peers, but momentum appears to have shifted for the better in the first quarter and the trends should remain positive in the second quarter. Also, the stock is trading at just 63 percent of its five-year historical P/E range — a discount to its peers, which are trading at 77 percent.

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