Raymond James initiated coverage on Equitable Holdings on Wednesday (NYSE: EQH) on Market Perform based on price-to-cash flow valuation and lack of catalysts that would significantly improve valuation.
The stock is trading at a ~9.7x P/CF multiple, in line with the historical average range of 9-10x (excluding 2020, due to the impact of COVID).
“EQH has a track record of thoughtfully managing its legacy variable annuity block in place,” noted analyst Wilma Burdis.
Burdis does not expect additional VA block sales until the end of 2023, but the likelihood of the same is expected to increase “materially” in 2024.
“EQH is separating non-NY policies from NY policies over the next year, which will facilitate the execution of risk transfers.
Equitable (EQH) moved out of US Treasuries and increased its exposure to structured products (as a % of invested assets) to 13.4% in the third quarter versus the life sector average of 9.7%.
Raymond James’ Q4 EPS estimate for Equitable ( EQH ) is $1.14, versus the consensus estimate of $1.26, reflecting expected earnings pressures from annuity management and investments given lower S&P 500 daily average levels in the quarter .
The research firm’s views are consistent with SA Quant’s Hold rating, but contrast with sell-side positive ratings.