Primerica's Robust Potential In Middle-Market Consumers: Insights From Truist Securities Analyst

Truist Securities analyst Mark Hughes reiterated a Buy rating on Primerica, Inc. PRI, raising the price target to $240 from $220.

The analyst sees a meaningful acceleration in transaction volume for Primerica, which is a positive indicator of the company's fundamentals in the second quarter, expected to be reported next month.

The analyst notes that Primerica's large sales force allows it to efficiently reach middle-market consumers, primarily ignored by competing insurance companies and financial advisors. 

Hughes bumped up the 2023 EPS estimate to $15.25 from $15.20 and the 2024 EPS forecast to $17.10 from $17.00.

The upswing is based on the favorable impact on the Investment & Savings Product (ISP) segment of the stronger performance of the S&P 500.

Hughes remains particularly optimistic about the company's highly-recurring Term Life revenue model and potential to benefit from stepped-up policy demand.

The analyst also remains upbeat on growth in applications for individual life insurance policies in the first two months of the second quarter (up 5.8% industry-wide) in the age categories between 0-50, most relevant to Primerica.

Industry-wide, term life sales advanced 4.7% in May compared to a gain of 8.9% for whole life and 13.1% for indexed universal life (which has a cash value component typically tied to stock market indices).

Based on the above, the analyst raised the second-quarter EPS estimate to $3.75 from $3.74. Total revenues for the quarter to be reported is expected to rise by 5.1% Y/Y to $706.24 million.

Price Action: PRI shares are trading higher by 1.05% to $201.22 on the last check Monday.