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Analysts Love MetLife for 2014

Following MetLlife CFO John Hele's disclosure on Thursday that its fourth-quarter earnings would be affected by "a fourth-quarter litigation asbestos reserve charge of $100 million to $120 million after-tax," Kinar reiterated his "buy" rating for MetLife and price target of $59, while leaving his earnings estimates for 2014 and 2015 unchanged.

What About Buybacks?

In a note to clients late Thursday, Yaron wrote, "based on our current earnings estimates, the company should generate roughly $800mm of incremental capital in '14 and another $1.3 bil increase in '15, for a total of nearly $6 bil ($5.30/ps) over the next two years."

Investors are wondering when some of MetLife's excess capital might be deployed.  The company pays a quarterly dividend of 27.5 cents a share, for a yield of 2.15%.  However, MetLife hasn't been buying back common shares.

MetLife CEO Steven Kandarian during the presentation on Thursday said the firm's return on equity target for 2016 "assumes that regulatory capital rules appropriately reflect the life insurance business model and that we have clarity in the rules and a reasonable timeframe, allowing for meaningful share repurchases prior to 2016."

"Regulatory uncertainty remains our primary challenge, a view that we have consistently expressed to investors," Kandarian added.  MetLife has said previously that it won't announce share repurchase plans until it receives greater clarification from regulators on whether or not it will be treated as a non-bank systemically important financial institution (SIFI).  Under that scenario MetLife's annual plans to deploy capital would be reviewed by the Federal Reserve.

"We are hopeful that we will be able to get things resolved on the regulatory front before the end of 2016, and that we will be able to do some share repurchases. But at this point in time, I really can't commit to what that number will be because we don't know the outcome yet of our potential non-bank SIFI designation," Kandarian said.  He also said the company wouldn't repurchase any shares during 2014.

Love From Other Analysts

"We are maintaining our $5.81 2014 operating EPS estimate. In addition, we are increasing our target price to $57 from $55 on the basis of higher expected core EPS results," Credit Suisse analyst Thomas Gallagher wrote in a note to clients on Thursday, following MetLife's presentations.  Gallagher rates MetLife "outperform."

While noting that MetLife didn't provide specific EPS guidance for 2014, Gallagher wrote that "MET's guidance implies about $5.85-$5.95 of operating EPS for 2014."

KBW analyst Jeffrey Schuman also rates MetLife "outperform," with a $57 price target, writing in a note to clients Thursday that he came away from the presentations with "more optimism about our expectation that Group underwriting results should improve in 2014."

With MetLife projecting an increase in expenses during 2014 because of "enterprise initiatives," Schuman lowered his 2014 EPS estimate slightly to $5.77 from $5.80.

MetLife's shares were down slightly in morning trading Friday, to $51.17.

MET Chart
MET data by YCharts

Interested in more on MetLife? See TheStreet Ratings' report card for this stock.

-- Written by Philip van Doorn in Jupiter, Fla.

>Contact by Email.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.
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