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Raymond James: Aflac Will Benefit From Yen Exchange Rate This Year

Priya Nigam

AFLAC Incorporated (NYSE: AFL) shares are being supported by the announcement of Japan Post's $2.6-billion investment in the insurer, according to Raymond James — and while Aflac's stock trades at a significant discount to peers, the company could report a “gradually improving ROE through 2020," in the firm's view. 

The Analyst

Raymond James analyst Gregory Peters maintains a Strong Buy rating on Aflac with an unchanged $53 price target.  

The Thesis

While Japan Post could buy around 50 million or more shares of Aflac in 2019, the company may also repurchase up to 28 million or more shares under its capital management program, Peters said in a Tuesday note. 

The programs together could result in demand of 10 percent or more of Aflac’s outstanding shares in 2019, representing a unique opportunity in large-cap financials, the analyst said. 

Aflac stands to benefit from an expected improvement in the JPY/USD exchange rate in 2019, Peters said. 

Raymond James' operating EPS estimates for 2019 and 2020 have been revised upwards from $4.15 to $4.20 and from $4.30 to $4.35, respectively, to reflect the stronger exchange rate assumption.

Price Action

Aflac shares were trading up 1.16 percent at $46.92 at the time of publication Wednesday. 

Related Links:

Benzinga's Top Upgrades, Downgrades For January 2, 2019

Aflac Incorporated Further Strengthens its Relationship with Japan Post Holdings

Photo courtesy of Aflac. 

Latest Ratings for AFL

Date Firm Action From To
Jan 2019 JP Morgan Downgrades Overweight Neutral
Nov 2018 Morgan Stanley Maintains Equal-Weight Equal-Weight
Sep 2018 Morgan Stanley Maintains Equal-Weight Equal-Weight

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