Aflac shares lag insurance peers as analysts hold a cautious view
Aflac’s stock has underperformed key insurance comparisons, while weaker recent results and concerns over growth in Japan weigh on its outlook.
Aflac shares have trailed major insurance peers, with investors weighing slower Japanese operations, softer premium growth and questions over the sustainability of earnings growth.
The insurer’s stock has risen 8 per cent over the past year, compared with an 8.3 per cent gain for the iShares U.S. Insurance ETF. MetLife shares have advanced 19.4 per cent over the same period. Over three months, Aflac gained 1.7 per cent, while the insurance ETF rose 12.4 per cent.
Aflac’s latest results added to the cautious outlook. Adjusted earnings were US$1.75 a share, missing expectations, while revenue fell 1 per cent year on year to US$4.1 billion. Higher benefits and claims also pressured the profitability of its US business, according to the report published by Yahoo Finance from Barchart.
Wolfe Research initiated coverage on 19 August with an “Underperform” rating and a US$103 price target. The downgrade came as Aflac faced scrutiny over whether share buybacks were contributing too heavily to earnings-per-share growth.
The consensus view remains neutral. Seventeen analysts have a “Hold” rating on the stock, with a mean price target of US$118.94, representing a reported 1.5 per cent upside to the current market price.
Aflac provides supplemental insurance in the United States and Japan, including cover related to accidents, cancer, critical illnesses and hospital stays. Its specialised products, brand recognition and distribution network underpin its competitive position, but analysts remain focused on whether the business can deliver sufficient underlying growth.
