MetLife Has Gained More Than 50%, Is It Still Attractive?

+20.80%
Upside
62.93
Market
76.02
Trefis
MET: MetLife logo
MET
MetLife

MetLife’s stock (NYSE: MET) has rallied 65% since March 23 (vs. about 37% gain in the S&P 500) to its current level around $39 after falling to a low of $23 in late March, as a rapid increase in the number Covid-19 cases outside China resulted in heightened fears of an imminent global economic downturn. But the stock remains 24% below the $51 peak it reached in mid-February, and we believe it can recover to the $43 level (10% upside) once fears surrounding the coronavirus outbreak are put to rest. Our conclusion is based on our detailed comparison of MetLife’s stock performance during the current crisis with that during the 2008 recession in an interactive dashboard analysis.

How Did MetLife Stock Fare During The 2008 Downturn And What Does It Mean For The Stock This Time Around?

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We see MET stock declined from levels of around $45 in October 2007 (the pre-crisis peak) to roughly $12 in March 2009 (as the markets bottomed out) – implying that the stock lost as much as 73% of its value from its approximate pre-crisis peak. This marked a sharper drop than the broader S&P, which fell by about 51%.

However, MET recovered strongly post the 2008 crisis to about $23 in early 2010 – rising by 96% between March 2009 and January 2010. On the other hand, the S&P bounced back by about 48% over the same period.

In comparison, MET stock lost 55% of its value between the market peak on February 19 to the low on March 23, and has already bounced back 67% since then. Keeping in mind the trajectory over 2009-10, this suggests a potential recovery to around $43 (10% upside) once economic conditions begin to show signs of improving. This marks a partial recovery back to the $51 level MET stock was at before the coronavirus outbreak gained global momentum.

But When Can We Expect This Recovery In MetLife Stock?

The rally across industries over recent weeks can primarily be attributed to the Fed stimulus which helped alleviate investor concerns about the near-term survival of companies. The gradual lifting of lockdowns globally has also helped the demand for some non-essential goods recover. Over the coming weeks, we expect continued improvement in demand and subdued growth in the number of new Covid-19 cases in the U.S. to buoy market expectations. While Q2 results will be weak, investors will focus their attention on 2021 results – helping MetLife stock trend higher over the latter half of the year. More information about MetLife’s revenues forecast over FY 2020-21 is available in our interactive dashboard.

Although MetLife has limited upside potential, we found a lot of strength in Prudential Financial’s stock

 

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