MetLife-Spinoff Brighthouse Financial Impresses Analyst With Business Mix Improvements

Shares of Brighthouse Financial Inc BHF remained highly volatile in early trading on Monday.

The stock has lost 23% year to date on weaker capital generation and uncertainties around the ongoing free cash flow trends, according to Keefe, Bruyette & Woods.

The Brighthouse Financial Analyst: Ryan Krueger upgraded the rating for Brighthouse Financial from Underperform to Market Perform, while trimming the price target from $48 to $47.

The Brighthouse Financial Thesis: Although there are no major catalysts for the stock ahead, the company is making gradual progress in improving its business mix, Krueger said in the upgrade note.

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Brighthouse Financial has also "strengthened legacy variable annuity hedging in recent years," the analyst wrote. The company's capital position remains solid, with a risk-based capital ratio of 415%-435% versus its target of 400%+, "and $1.3b of holdco liquidity relative to $250m of annual fixed charges," he added.

Referring to investor concerns around Brighthouse Financial's free cash flows, Krueger said that the stock is "now trading at a more reasonable 2025E free cash flow yield of 13%."

BHF Price Action: Shares of Brighthouse Financial had risen by 1.5% to $41.65 at the time of publication on Monday.

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