LNC - Lincoln Financial cut to Hold at Jefferies on capital return prospects

Jefferies analyst Suneet Kamath has downgraded Lincoln Financial ( NYSE: LNC ) to Hold from Buy on Monday as the life insurer's capital return is expected to come in lower over the next six to twelve months.

The company is in the process of rebuilding excess capital, which was marked at approximately $1B at the start of 2022, after an array of factors drove a sizable slump, including its buybacks during the first half of 2022, Covid-related claims and negative stock markets, Kamath wrote in a note to clients.

"We think it may take time for LNC to regain credibility on capital return following aggressive buybacks at an average price of ~$70 in 4Q:21 & 1Q:22, vs. its current price of ~$47," Kamath wrote in a note to clients.

All in all, Kamath sees LNC buying back just $50M worth of its stock in the back half of the year, a "well below normal" move. "We expect LNC will likely be more cautious with buybacks in the near term, especially considering it has a new CEO ," he warned.

Kamath's Hold rating agreed with both the Quant system and average Wall Street analyst views of Hold.

See why SA contributor Buildings Benjamins sees Lincoln Financial as a Buy .

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