Morgan Stanley upgrades Globe Life to Overweight, raises price target to $166.

Morgan Stanley upgrades Globe Life to Overweight, raises price target to $166.

Morgan Stanley has upgraded Globe Life (NYSE:GL) to "Overweight," raising its price target to $166.00 from $135.00. The upgrade follows the conclusion of investigations by the Securities and Exchange Commission (SEC) and Department of Justice (DOJ) into Globe Life's sales practices, which Morgan Stanley believes has removed significant uncertainty surrounding the company [1].

Globe Life, with a market capitalization of $11.5 billion, has maintained strong fundamentals throughout the period of investigation. The company has demonstrated remarkable growth, with a 58.59% return over the past year. According to InvestingPro data, analyst targets for the stock range from $135 to $188 [1].

The investment bank noted that Globe Life’s average multiple has historically been around 11x, with reliable earnings outperformances maintaining this valuation through various economic cycles. Morgan Stanley attributed the multiple contraction over the past 18 months to the DOJ and SEC investigations on sales practices and uncertainties around the company’s Health segment earnings [1].

With these headwinds now removed, Morgan Stanley expects investor focus to shift back to Globe Life’s fundamentals and steady earnings growth, seeing a path for the company’s multiple to expand from the current 9.5x back to its historical 11.0x average [1].

Recent developments have also provided clarity and positive momentum for Globe Life’s stock. The U.S. Attorney’s Office for the Western District of Pennsylvania concluded its investigation into the sales practices of Globe Life’s subsidiary, American Income Life, without any enforcement action. This resolution removes a major regulatory uncertainty for the company [1]. Following this news, TD Cowen reaffirmed its Buy rating on Globe Life, maintaining a price target of $182. Similarly, Keefe, Bruyette & Woods raised its price target for Globe Life to $160 from $155, continuing to rate the stock as Outperform. BMO Capital increased its price target for Globe Life to $149, citing potential improvements in free cash flow and price-to-earnings metrics [1].

References:
[1] https://za.investing.com/news/analyst-ratings/morgan-stanley-upgrades-globe-life-stock-rating-to-overweight-on-sec-doj-case-closure-93CH-3819222