This forecast reflects the confidence in Voya Financial's strategic direction and operational performance, positioning the asset manager for a promising future in the financial industry.
Voya Financial's management team is making significant strides in steering the company towards a positive turnaround, as noted by Morgan Stanley analyst Bob Jian Huang. After an August downgrade, Huang upgraded Voya's shares to overweight from equal weight and raised the 12-month price target by 14% to $87, indicating a potential upside of over 23%.
Despite a modest increase in share value over the past year, Huang believes that the current valuation underestimates Voya's potential.One factor contributing to Voya's underperformance was a full-year earnings miss in 2024.
Voya Financial's Turnaround Gains Momentum
Voya Financial's management team is making significant strides in turning the company around, a move that has caught the attention of Morgan Stanley.
The company anticipates growth in its core business areas, particularly within wealth solutions and investment management. Recent acquisitions are expected to bolster excess capital generation in the upcoming year.Huang expressed confidence in Voya's management team, believing that their strategic initiatives will lead to improved earnings potential and overall company prospects.
He emphasized the importance of successful integrations, investments, and segment enhancements in driving capital generation and fostering growth. Looking ahead to 2026 and beyond, Voya's efforts in turnaround are poised to position the company for long-term success.
Morgan Stanley's Positive Outlook
Analyst Bob Jian Huang of Morgan Stanley has raised Voya Financial's stock rating to overweight from equal weight, while also increasing the 12-month price target to $87 from $76, indicating a 14% growth.
However, Huang pointed out that the stock is currently trading below its historical average and is less capital intensive. He highlighted that improvements in EPS growth, return on equity (ROE), and capital intensity, despite the challenges posed by the COVID-19 pandemic, have not been fully reflected in the stock price.Since the earnings miss,
Voya's management has been taking proactive measures to enhance performance through new pricing strategies and better risk selection.
Reversal of Fortune
Following concerns over Voya's health solutions business, Morgan Stanley's decision marks a reversal from the previous downgrade in August, where the stock was moved to equal weight from overweight.
Potential Upside
Despite a modest increase of less than 4% in the past year, Huang's revised price target suggests a potential upside of over 23% for Voya Financial's shares.
Valuable Yield
With a yield of 2.55%, as reported by FactSet data, Voya Financial continues to offer investors a valuable return.
Strategic Actions
Post the 2024 earnings miss, Voya has been actively taking strategic measures to enhance its performance through new pricing strategies and improved risk management, paving the way for a promising growth trajectory beyond 2026.
Enhanced Business Prospects
Voya anticipates growth in its core business areas, such as wealth solutions and investment management, with recent acquisitions expected to bolster excess capital generation in the coming years.
Confidence in Management
Huang expressed confidence in Voya's management team, believing in their ability to successfully navigate through integrations, investments, and operational enhancements, ultimately leading to improved capital generation.
