Key Takeaways
- Globe Life shares fell 8% after Piper Sandler downgraded the stock to Neutral from Overweight and cut its price target to $165 from $200.
- Piper Sandler says Globe Life is no longer a predictable safe haven, pointing to bigger medical claims, irregular Medicare supplement claims and softer 2027 guidance.
- Third-quarter net operating income fell 4% in dollars, and buybacks turned that into a 1% gain per share.
- The stock trades close to its five-year average multiple. Watch whether health claims settle by the fourth-quarter report.
Globe Life (GL) sank 8% this morning after Piper Sandler downgraded the life insurer to Neutral from Overweight and cut its price target to $165 from $200.
Piper Sandler analyst Paul Newsome said that after Wednesday’s third-quarter report, Globe Life is no longer a “predictable safe haven” in life insurance.
No life insurer wants to lose that label.
Three problems in one quarter
Globe Life earned $4.84 a share in net operating income in the third quarter. Analysts had expected $4.89, and total premium revenue still grew 7%.
Piper pointed to three issues from the quarter:
- Medical claims are getting bigger, and Piper expects the swings to continue even though Globe Life has reinsurance on that business.
- Medicare supplement claims have been irregular, and Piper expects that to last for the next few quarters.
- 2027 guidance looks weaker for the core business.
Piper also warned that rivals are being choosy about who they cover and pushing for higher rates. That could leave Globe Life with the riskier customers in the very area where it’s chasing growth.
TIKR tracks 11 analysts on Globe Life. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Globe Life, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Globe Life’s Analyst Ratings
Buybacks are doing the heavy lifting
On Thursday’s call, management’s 2027 outlook implied about 7% EPS growth at the midpoint, with much of it coming from buybacks. This year’s growth is expected to be about 8%…
Analysts expect even less. Their $16.45 for 2027 is about 5% above this year’s expected $15.62, and that figure could slip if Medicare supplement claims stay irregular.
The third quarter shows how much the buybacks carry. Net operating income fell 4% to $378.8 million. But Globe Life bought back 1.1 million shares for $185 million in the quarter, and with fewer shares outstanding, per-share earnings still rose 1%.
It’s been doing this for years. The diluted share count shrank by about a fifth from 2021 to 2025…
A fair price for shakier earnings
Before today’s drop, Globe Life traded at about 11x forward earnings. That’s right around its 10x average for the past five years and well below its high of nearly 14x in early 2022. Today’s drop takes it closer to 10x.
Not everyone is backing away. TD Cowen trimmed its target to $215 from $225 on Friday and kept its Buy rating. And book value per share excluding AOCI grew 11% over the past year, to $103.62.
My take: Piper has it right. The stock trades at its usual multiple while its growth slows, so I’d want proof that health claims are under control before buying.
Of course, if claims calm down by the fourth-quarter report early next year, the safe-haven case could come back quickly.
So what is Globe Life stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
