Aflac shares soar after strong first quarter

Aflac shares soar after strong first quarter and positive growth outlook from Japan

Associated Press

NEW YORK (AP) -- Insurance company Aflac Inc. stock soared at mid-afternoon trading Wednesday after the company reported that its profit more than doubled on a surprise increase in sales in Japan.

THE SPARK: The company said late Tuesday that rising sales of insurance policies in Japan helped more than double its first-quarter income to $785 million from $389 million a year earlier. Its per-share income of $1.68 trumped analysts' average forecast for $1.65 a share.

THE BIG PICTURE: Aflac, which is based in Columbus, Ga., provides disability and supplemental insurance, primarily in Japan but also in the U.S. The company said it now expects its full-year sales in Japan to rise 10 percent, in contrast with an earlier forecast for a drop. The first-quarter results and outlook marked a turnaround. Aflac's Japanese operations were hurt by the tsunami of March last year.

Aflac's results also got a boost from the value of the yen rising against the dollar in the first quarter. Its total revenue in yen increased 7.8 percent. Converted to dollars, the stronger exchange rate meant the unit's total revenue increased 12 percent to $4.9 billion.

THE ANALYSIS: The results and outlook took Wall Street by surprise and led Steven Schwartz, an analyst at broker Raymond James, to raise his 12-month price target for the stock to $57 from $53.

Schwartz has an "outperform" rating on the stock, and he raised his earnings estimates for 2012 and 2013 to $6.48 per share and $6.70 per share, respectively. That's up from $6.39 and $6.62. Schwartz said the company had strong growth opportunities in both the U.S. and Japan. The company expects $6.46 to $6.65 per share for 2012, which it said would amount to an increase of 3 percent to 6 percent over its restated 2012 earnings.

SHARE ACTION: Aflac's stock rose $3, or 7.1 percent, to $45 by mid-afternoon. The shares have traded between $31.25 and $57.39 in the last 52 weeks.

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