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Shares of MetLife (NYSE:MET), -1.1%, and Equitable Holdings (NYSE:EQH), -2.2%, drifted down in Friday afternoon trading after Jefferies analyst Suneet Kamath downgraded the insurance-related stocks to Hold from Buy, citing a number of recessionary risks.
For life stocks, while some see tailwinds from rising interest rates, lower Covid-19 mortaility and low credit losses, Kamath sees headwinds from “weaker credit / ratings migration and softer group benefit / retirement results,” he wrote in a note.
The analyst raised bearish prospects for softer results in MetLife’s (MET) Group Benefits segment as the economy weakens, as well as “likely lower-than-normal alternative returns (on higher rates and market volatility), and 3) sentiment risk as the stock strikes us as crowded.”
Still, the company’s stronger than expected Q3 earnings reflected volume growth across its segments along with higher interest rates supporting core spreads. Kamath’s Hold rating was in line with the Quant system’s Hold rating but diverged from the average Wall Street analysts’ Buy rating.
Meanwhile, Kamath struggled to “identify catalysts to drive material outperformance” for Equitable (EQH), the note read. EQH shares dipped 10.7% year-to-date.
See how the stats of the two companies compare in the Peers tab.
Take a look at why Seeking Alpha contributor Seeking profits views MetLife as a Hold, too.
Image and article originally from seekingalpha.com. Read the original article here.