Manulife: Analysts Indicate that It's Time to Buy

By Tara Perkins

Shares of Manulife (MFC) gained another 2% Monday, with most analysts suggesting to clients that it’s a decent time to buy despite the fact the insurer’s third-quarter earnings fell short of expectations on Thursday.

Credit Suisse analyst Jim Bantis said it was a “disappointing and noisy” quarter, but that didn’t stop him from upgrading his rating to neutral from underperform. His reasoning was that, with a 12% pullback in the company’s stock price since the last quarterly results, its value of 1.3 times price to book value is a better reflection of its actual potential.

Mr. Bantis also noted that Manulife has now completed its review of its actuarial assumptions (which caused a $783 million hit in the quarter), it doesn’t look like it will raise common equity any time soon and its executives are working to reduce its exposure to stock markets.

RBC analyst Andre-Philippe Hardy also upgraded the insurer, to “outperform,” even though he doesn’t expect it to earn the same kind of returns as it has in the past, and he thinks its profits will be more volatile. Like Mr. Bantis, his rationale was largely that the stock’s current value is a better reflection of reality. The worst is behind the company in terms of earnings surprises, he said. And, “Manulife is still relatively well-positioned to pursue acquisitions which, based on prior acquisition successes, could prove to be attractive to Manulife’s shareholders.”

CIBC analyst Darko Mihelic continues to rate the company “sector performer,” and lowered his 2009 earnings per share estimate to 78 cents from $1.18. But he’s left his 2010 estimate of $2.21 unchanged.