LNC: Earnings Resilience And Sector Tailwinds Will Support Steady Performance Ahead

Lincoln National’s analyst price target has increased by $2, to $42 per share, as analysts cite continued earnings resilience, sector tailwinds, and improved claims experience supporting the outlook.

Analyst Commentary

Analysts are divided in their perspective on Lincoln National, with several highlighting both positive developments and ongoing concerns influencing the company’s outlook and valuation.

• Bullish analysts point to the company's turnaround efforts and shift towards a more capital-light business mix. These factors support an upgrade and a higher price target, along with the expectation for improved valuation multiples.
• Recent results reflected profitable earnings growth and robust capital levels, indicating that strategic execution is gaining traction.
• Improved claims experience and fewer adverse macroeconomic impacts in recent quarters have bolstered confidence in near-term earnings resilience.
• Favorable sector dynamics, such as positive industry-wide investment income trends and steady distribution strength, are viewed as tailwinds that could support further growth.

• Bearish analysts remain cautious, noting that Lincoln National may continue to face secular headwinds, particularly around net flows. There is uncertainty over when distributable earnings and capital returns will inflect higher.
• Concerns persist regarding the adequacy of pricing in certain lines and the longer-term sustainability of profit margins, especially in the context of rising capital costs in the insurance sector.
• A neutral outlook is maintained by some due to the perceived lack of near-term catalysts and ongoing challenges in re-rating the stock toward historical valuation norms.

What's in the News

• Piper Sandler raised Lincoln National's price target to $42, citing strong claims experience, continued sector tailwinds, and expectations for future earnings improvements (Periodical).
• Lincoln Financial formally launched its new private market fund, the Lincoln Partners Group Royalty Fund. Developed with Partners Group, the fund provides individual investors access to cross-sector royalties in sectors including pharmaceuticals, music, and energy transition (Key Developments).
• The company launched Lincoln Level Advantage 2 IncomeSM, its first registered index-linked annuity with a built-in income benefit. The product offers protected lifetime income, legacy protection, and flexible investment choices (Key Developments).
• Lincoln Financial announced the launch of the Lincoln Bain Capital Total Credit Fund, an evergreen private market fund that offers individual investors access to private credit investments through a partnership with Bain Capital (Key Developments).

Valuation Changes

• Fair Value remains steady at $44 per share, indicating no change in analysts' intrinsic valuation.
• Discount Rate has risen slightly, from 7.83% to 7.84%. This reflects a modest increase in the return required by analysts.
• Revenue Growth has edged down marginally, moving from 5.35% to 5.32%. This signals slightly more conservative growth expectations.
• Net Profit Margin has increased slightly, climbing from 7.86% to 7.87%. This points to a minor improvement in profitability forecasts.
• Future P/E has risen minimally, from 7.56x to 7.56x. This indicates a very modest uptick in projected earnings multiples.