Thursday, March 02, 2006

Manulife Upgraded at Bear Stearns, 2 March 2006

Analyst Saul Martinez of Bear Stearns upgrades Manulife Financial Corp from "underperform" to "peer perform," while raising his estimates for the company.

In a research note, the analyst mentions that the company continues to deploy its capital in high return/growth businesses. Manulife Financial is also pursuing the necessary measures to maintain its above-average growth/profitability, Bear Stearns says. The EPS estimates for 2006 and 2007 have been raised from C$4.67 to C$4.88 and from C$5.20 to C$5.45, respectively.

Bear Stearns upgraded Manulife Financial Corp. shares. In addition, the brokerage raised its 2006 and 2007 EPS estimates for the company.

Analyst Saul Martinez noted that he recently met with members of Manulife Financial's senior management team in Toronto. The analyst said he came away impressed by management's focus on not only continuing to allocate capital towards high return/growth businesses, but to “doing the little things” necessary to maintain above average growth/profitability.

Accordingly, the analyst increased his 2006 EPS estimate to US$4.21 from US$4.03 and 2007 estimate to US$4.73 from US$4.52. Moreover, the analyst said that his ROE forecasts have increased to 16.0% and 16.4% in FY06 and FY07, respectively, up 60-70 basis points.

Ultimately, Martinez believes that the company has many of the characteristics he favors, such as diversified earnings, substantial capital flexibility, and an above average growth/profitability outlook. However, the analyst said that Manulife's premium valuation suggests that the company's solid return/growth outlook is adequately reflected in the share price.

Accordingly, the analyst raised his rating on the company's shares to Peer Perform from Underperform.