EQH - Raymond James initiates Equitable Holdings at Market Perform

Raymond James on Wednesday initiated coverage of Equitable Holdings ( NYSE: EQH ) at Market Perform based on price-to-cash-flow valuation and lack of catalysts that would significantly improve valuation.

The stock is trading at ~9.7x P/CF multiple, in line vs. historical average range of 9-10x (excluding 2020, due to COVID impacts).

"EQH has a track record of thoughtful management of its in-force legacy variable annuity block," analyst Wilma Burdis noted.

Burdis does not expect additional VA block sales till late 2023, but likelihood for the same is expected to pick up "more materially" in 2024.

"EQH is separating non-NY vs. NY policies over the next year, which will make risk transfers easier to execute.

Equitable ( EQH ) shifted out of U.S. government securities and increased structured product exposure (as a % of invested assets) to 13.4% in Q3 vs. life sector average of 9.7%.

Raymond James's Q4 EPS estimate for Equitable ( EQH ) is $1.14 vs. $1.26 consensus , reflecting expected pressures on annuity and investment management earnings given lower daily average S&P 500 levels in the quarter.

The research firm's views are in line with SA Quant's Hold rating , but contrasts bullish sell-side ratings .

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