Metlife Inc (NYSE:MET) — Standard & Poor’s raised its 12-month price target on MET stock by $7 early this month due to the company’s restructuring plans, which will result in a spinoff/sale of its life insurance/annuity unit. S&P believes that the restructuring will enhance future earnings, leaving it with a broad overseas presence and more of an institutional focus in the U.S.
Management says the move should remove the company from the U.S. government’s additional rules and scrutiny concerning a “systemically important financial institution” (SIFI), and liabilities should be cut to a shorter-term duration.
S&P estimates operating earnings of $4.58 in 2016 and $5.75 in 2017. Thus this leading, diversified life insurance and financial services company is currently trading at just 8.3 times S&P’s earnings estimate for 2017 vs. a peer average forward of 9.6. At the current price, the dividend yield is 3.4%. Their price target for Metlife stock is $54.
MET Stock Charts
Technically, Metlife stock has been consolidating within a “W” formation since April. It broke from the formation early this month, leaving a breakaway gap at $46.18 to $46.52, and triggering a major, long-term bull market signal — the golden cross.
The gap was closed during the formation of a small right triangle which found support at the stock’s green 20-day moving average. Since August, MET stock has been accumulating buyers, thus the breakout is confirmation of a long-term change of trend from bear to bull.
I’ll go along with S&P’s target of $54, but I believe that the breakout could result in the run-up to a higher level.
Traders and investors should buy MET at $47 with a target above $54.
