BMO Capital analyst Tom MacKinnon lowered the price target for Sun Life Financial Inc (TSX:SLF) (NYSE:SLF) to C$72 from C$75, with an Outperform rating on the shares.
While IFRS17 impact to underlying EPS, at 5%, was perhaps larger than expected, with 2023E underlying EPS estimates/TP declining accordingly, a positive outlook for future growth on a larger contractual service margin (CSM) provides good visibility into future underlying EPS growth.
MacKinnon mentions that SLF maintains an 8%-10% medium-term underlying EPS growth outlook and sees modest positive to already strong LICAT.
With underlying EPS being primary valuation metric, the analyst sees little impact from outsized BVPS impact (15%-20%) and is largely offset by the underlying ROE target upped to 18%+.
Price Action: SLF shares are trading higher by 0.99% at C$62.39 on TSX and higher by 1.39% at $49.49 on NYSE on the last check Wednesday.
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