FG - Barclays initiates F&G Annuities at Equal Weight on limited upside potential

Barclays on Monday initiated coverage on F&G Annuities & Life ( NYSE: FG ) at Equal Weight, citing limited upside potential.

It expects F&G ( FG ) to trade at a discount due to restricted public float, with Fidelity National Financial ( FNF ) retaining 85% stake. F&G ( FG ) shares returned to the market after a partial spinoff by Fidelity ( FNF ).

"The company outperformed initial expectations and rapidly evolved into a multi-product, multi-channel insurer, yet we see limited upside potential from current levels," said analyst Mark DeVries.

Barclays set a $22 price target (12.5% potential upside to last close), which assumes a ~6x P/E multiple on 2023E EPS of $3.77.

F&G's ( FG ) sales growth is projected to slow from the past few years, but DeVries noted that "slowing growth would unlock the potential for capital distributions to shareholders".

"FG is able to generate higher investment returns than its competition at comparable to lower levels of risk (average NAIC rating on investments of 1.5) due to the Blackstone partnership paired with stable liabilities through high levels of surrender charge protection that enable it to capture investment premia (liquidity and complexity)," said DeVries.

Under the partnership, F&G ( FG ) sources private investment opportunities for its portfolio through Blackstone's alternative asset management platform.

Wall Street analysts on average rate F&G ( FG ) Buy, while SA Quant rates the stock Hold .

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