Brighthouse Finishes Down on First Trading Day
August 7, 2017 by Greg Shulas
Brighthouse Financial debuted on the Nasdaq exchange Monday, finishing the day down 4.41% from its pre-opening share price of $64.57. The market debut kicked off the retail annuity provider’s first full trading day as an independent company from MetLife.
Charlotte, N.C.-based Brighthouse (Nasdaq: BHF) closed at $61.72, below the consensus mean price target of $71.00 per share from Thomson Reuters, based on three analysts’ recommendations. Reuters reported that at least five brokerages covering the stock listed it as “market perform” or a similar rating.
For the day, the Nasdaq closed up 32.21 points, or .51%, to finish at 6,383.77, as the Dow Jones Industrial Average notched its ninth consecutive record close, finishing at 22,118.42.
Brighthouse closed with a market capitalization of $7.4 billion, in the same range as competitor Voya Financial; below Athene ($9.5 billion market cap); and above smaller peers such as CNO Financial ($3.9 billion) and American Equity Investment Life Holding Co. ($2.4 billion). According to The Wall Street Journal, Brighthouse Financial has an estimated book value, ie, assets minus liabilities, of between $10 billion to $11 billion, indicating that its shares are trading below that financial metric.
Wells Fargo Securities analyst Sean Dargan told Reuters that an independent Brighthouse will offer stronger value if interest rates increase further, although he does not currently view its “risk-reward” potential positively. “If interest rates fall from here or equity markets retrace, we would expect BHF to be a heavily shorted name,” Dargan tells Reuters.
Brighthouse kicked off its first day as a publicly traded company with an ad and video campaign highlighting MetLife’s influence on the independent firm, its veteran management team, strong financial ratings, $219 billion in assets under management, and 2.7 million customers, Life Annuity Specialist reported. To stress these themes, the retail life insurer and annuity provider placed print and digital ads in influential business publications such as the New York Times, Barron’s, and the Financial Times.
MetLife closed the day with a share price of $48.53, up 1%, and a market cap of $52.2 billion. MetLife common shareholders obtained one share of Brighthouse common stock for 11 shares of MetLife stock when Brighthouse officially converted into an independent company after trading hours Friday, the Journal reported
The spinoff will help MetLife focus on less interest-rate sensitive and capital intensive business such as group life insurance, employee benefit products, retirement services and asset management. MetLife CEO Steven Kandarian expects a solid portion of post-spinoff growth to come from international markets where interest rates are more attractive than in the U.S.
According to Reuters, the spinoff ends MetLife’s status as the largest U.S. life insurer by assets under management. Newark, N.J.-based Prudential Financial will now hold that title, with roughly $800 billion in AUM.
