Last Update 25 Jan 26

BHF: Take Private Spread And Sector Headwinds Will Shape 2026 Returns

Analysts have nudged their 12 month price target for Brighthouse Financial slightly higher to about US$65.50. This reflects a balanced view that incorporates the Aquarian take private deal, more neutral ratings, and only modest tweaks to long term growth, margin, and P/E assumptions.

Analyst Commentary

Street research around Brighthouse Financial has shifted toward a more neutral stance after the Aquarian take private announcement, with most of the discussion now centered on how much additional upside, if any, is left for public shareholders.

Bullish Takeaways

Bullish analysts point to the agreed US$70 per share takeout price and see the current trading level as anchored by that cash offer, which can limit downside if the deal progresses as expected.
Some see roughly 6% remaining upside to the takeout price as a reasonable risk reward for investors who are comfortable with deal execution risk and a capped return profile.
There is a view that capital strength, cash flow, and ongoing consolidation within life insurance support the case that the Aquarian valuation appropriately reflects the company’s underlying franchise.
The assumption that the transaction will close and Brighthouse will be taken private helps remove longer term uncertainty around P/E, growth, and margin assumptions, which simplifies the near term thesis.

Bearish Takeaways

Bearish analysts argue that, with ratings now downshifted to more neutral levels, the stock offers limited upside compared with other names that they believe have greater intermediate term appreciation potential.
Some are cautious that any remaining spread between the current price and the US$70 offer may not be attractive enough once you factor in deal timing, regulatory approvals, and general execution risk.
There is concern that headwinds such as spread compression and higher technology spend could weigh on sector profitability, leaving less room for any valuation re rating beyond the agreed buyout price.
The move to hold type ratings, often without a fresh public market price target, signals that several analysts see Brighthouse primarily as a merger arbitrage situation rather than a core long term growth story at this stage.

What's in the News

Aquarian Holdings is reported to be in advanced talks on a roughly US$4b deal to take Brighthouse Financial private, with a potential offer of up to US$70 per share, according to The Financial Times (periodical, FT via Antoine Gara and Sujeet Indap).
Aquarian Holdings, LLC entered into an Agreement and Plan of Merger to acquire Brighthouse Financial, Inc. for about US$4.1b. Each share of common stock is entitled to receive US$70 in cash, funded with committed financing and without incremental debt at Aquarian Capital insurance businesses or Brighthouse Financial (M&A transaction announcement).
The merger is subject to shareholder approval, antitrust clearance under the Hart Scott Rodino Act, approvals from insurance regulators in Delaware, New York and Massachusetts, and approval from FINRA. Both boards unanimously approved the deal, with closing targeted in 2026 (M&A transaction announcement).
As of November 11, 2025, AM Best placed the Financial Strength Rating of A (Excellent) and Long Term Issuer Credit Ratings of Brighthouse Life Insurance Company under review with negative implications, citing transaction and execution risks related to the Aquarian deal (M&A transaction announcement).
Brighthouse has a Special and Extraordinary Shareholders Meeting scheduled for February 12, 2026, and reports that from July 1, 2025 to September 30, 2025 it repurchased 0 shares, while completing a total of 6,309,262 shares, or 10.43%, for US$334.77m under the buyback announced on November 16, 2023 (company event disclosures).

Valuation Changes

Fair Value: Fair value stays at about US$65.50, indicating no change in the central estimate used in the model.
Discount Rate: The discount rate is now 9.93%, adjusted slightly from 9.91%, which leaves the overall risk assumption broadly similar.
Revenue Growth: The revenue growth assumption is now 7.43%, compared with 7.46% previously, reflecting a very small change in expected top line expansion.
Net Profit Margin: The net profit margin assumption is now 10.64%, unchanged from 10.64%, a minimal revision that keeps the profitability view effectively the same.
Future P/E: Future P/E is now 4.55x, compared with 4.54x before, representing only a very modest adjustment to the valuation multiple assumption.

Strong demand for annuities and innovative retirement products, plus expanded distribution, is broadening Brighthouse's customer base and supporting premium growth.
Strategic focus on capital efficiency, technology investment, and a favorable interest rate environment is driving improved margins, operational leverage, and earnings stability.
Ongoing losses, limited capital flexibility, competitive pressure, and exposure to market-driven products threaten Brighthouse's earnings stability, future growth, and shareholder returns.

Catalysts

About Brighthouse Financial

Provides annuity and life insurance products in the United States.What are the underlying business or industry changes driving this perspective?

Ongoing strong demand for annuity and life insurance products, as evidenced by record year-to-date life sales and significant Shield sales, is underpinned by the substantial retirement wave among older Americans, expanding Brighthouse's revenue base as more individuals seek guaranteed income solutions and longevity protection.
The company's growing involvement with innovative retirement income products, such as BlackRock's LifePath Paycheck, is opening up new distribution channels via the workplace and allowing Brighthouse to reach broader customer segments, which should drive higher premium growth and diversify top-line revenue.
Strategic initiatives focused on capital efficiency-such as the refinement and separation of hedging strategies for variable annuities and Shield business, coupled with prudent expense management-are expected to reduce earnings volatility and improve net margins over time.
Brighthouse's ongoing investment in technology and the strength of its distribution partnerships support efficient customer acquisition and operational scalability, which are likely to enhance operating leverage and profitability as digital transformation continues across the industry.
A higher-for-longer interest rate environment is beneficial for fixed and annuity products, supporting improved spread income and investment yields for Brighthouse, which should provide an uplift to net investment income and strengthen overall earnings.

Brighthouse Financial Earnings and Revenue Growth

Brighthouse Financial Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Brighthouse Financial's revenue will grow by 6.1% annually over the next 3 years.
Analysts assume that profit margins will increase from 7.0% today to 10.7% in 3 years time.
Analysts expect earnings to reach $1.0 billion (and earnings per share of $20.78) by about September 2028, up from $562.0 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $1.3 billion in earnings, and the most bearish expecting $774 million.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 3.8x on those 2028 earnings, down from 4.5x today. This future PE is lower than the current PE for the US Insurance industry at 14.6x.
Analysts expect the number of shares outstanding to decline by 3.71% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 11.37%, as per the Simply Wall St company report.

Brighthouse Financial Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Persistent statutory and GAAP losses in recent periods (notably $400 million normalized statutory loss in Q2 2025 and sequentially declining adjusted earnings) raise concerns about the company's ability to generate sustainable earnings, which could pressure return on equity and long-term profitability.
Heavy reliance on variable annuities and Shield products, which are highly sensitive to capital markets, policyholder behavior, and hedging effectiveness, exposes Brighthouse to greater earnings volatility and capital strain, particularly in adverse or volatile market environments.
Questions around legacy liabilities, complicated capital structure, and negative unassigned surplus in core operating subsidiaries (BLIC)-combined with disclosure that capital excesses from certain reinsurance subsidiaries have largely been exhausted-point to ongoing constraints on capital flexibility, which may limit future dividend capacity, buybacks, and reinvestment, thus impacting shareholder value.
Increased competitive pressure-including slowing growth in the company's key Shield product line and references to more challenging pricing and competition-suggests potential for stagnating or declining revenues, especially if Brighthouse does not keep pace with broader industry innovation or digital distribution trends.
Heightened mortality severity and underwriting losses in both Life and Run-off segments this quarter, if not transitory, could signal adverse risk trends or liability projections, leading to lower underwriting margins and potentially necessitating strengthening of reserves, further affecting future earnings and capital adequacy.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $56.222 for Brighthouse Financial based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $72.0, and the most bearish reporting a price target of just $42.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $9.6 billion, earnings will come to $1.0 billion, and it would be trading on a PE ratio of 3.8x, assuming you use a discount rate of 11.4%.
Given the current share price of $44.69, the analyst price target of $56.22 is 20.5% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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