Piper Jaffray Cuts Price Target After Torchmark Corp. (TMK) Reports Mixed Results

Piper Jaffray maintained a Neutral rating on Torchmark (NYSE: TMK), and cut the price target to $57.00 (from $58.00), following the company's 4Q earnings report. TMK reported 4Q EPS of $1.05, a penny below consensus. Upside from Life and Health offset the lack of Part D. Management determined that the Part D business met the criteria to be held for sale and is now reported in Disc Ops. TMK raised its 2016 guidance nearly 1% at the mid-point.

Analyst John Nadel commented, "EPS of $1.05 was in line with us and a penny shy of consensus as upside from Life & Health underwriting margins offset the move of Part D to discontinued operations. Mgmt raised its 2016 guidance nearly 1% at the mid-point (adjusting for Part D). Despite better Life & Health margins, we expect focus will be on 1) QoQ decline in agent counts in American Income & Liberty; 2) YoY decline in Life sales at Direct Response (which caused total company Life sales to slow to 2.4% YoY vs. recent HSD/LDD pace); and 3) ongoing margin deterioration at Direct Response. Given the premium valuation of 11x our 2017E EPS and 1.75x 4Q15 BVPS excl. AOCI, we remain Neutral. Moreover, given recent Japanese-domiciled financial services/insurance company stock reactions to BoJ rate actions, we believe probability of TMK being taken out (similar to recent deals for PL, SFG, SYA) has declined materially."

For an analyst ratings summary and ratings history on Torchmark click here. For more ratings news on Torchmark click here.

Shares of Torchmark closed at $52.24 yesterday.

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