What to Expect from Manulife's Upcoming Earnings Report

● This financial services company is expected to post quarterly earnings of C$0.91 per share in its upcoming report, which represents a year-over-year change of +15%. Revenues are expected to be C$3.78 billion.

● Led by Hong Kong, core earnings in Asia rose 14% in Q4 2023, and analysts expect Q1 2024 to be similar.

● The share price has gone up 8.57% since the start of 2024.

With good momentum in the asset management, as well as Canada and Hong Kong operations, along with a tailwind from higher interest rates, Manulife may post 15% year-over-year growth in 1Q 2024 core EPS, based on consensus. In 2023, net asset-management flows were resilient ($5 billion), while many peers saw outflows. This, combined with rising equity markets lifting account values, should drive strong 1Q 2024 asset-management profit growth.

In Canada, earnings are likely to improve at a moderate pace, with organic gains in group benefits, rising investment income and cost control.

In Asia, according to BMO Capital analyst, Manulife's Asia business keeps outpacing "top Asian peers on important KPIs, especially for 2023, where IFRS17 applies." Asia representing 37% of Manulife's 2023 core earnings, which is expected to climb to 50% by 2027.

Moreover, core profit in Hong Kong was up more than 40% in 4Q 2023, and analysts expect a similar trend in Q1 2024, as the reopening of the mainland border last year buoyed sales.

In the US, MFC operates in the US mainly in the areas of Annuities and Life Insurance. The US business has been under some pressure, with reducing new business sales, and earnings. New business sales have been impacted especially in the accumulation policies as higher interest rates created competition from cash deposits as an alternative, and in force earnings by increases in policy lapses and claims.

Source: Manulife Company

BMO Capital raised the firm's price target on Manulife Financial to C$40 from C$35 and keeps an Outperform rating on the shares. RBC Capital maintains a 'buy' rating for Manulife Financial and keeps the target price at C$38.

According to Bloomberg analysts, Manulife's top-line momentum eased during the pandemic but as those impacts more fully wane, the company has a strong long-term outlook, supported by its broad footprint in several faster growing markets in Asia. In addition, it has a robust capital position $10 billion above its internal target, which can be used for organic growth, buybacks or bolt-on acquisitions. Manulife has eased risk with recent deals to exit legacy long-term care and annuity books.

Source: Bloomberg, Seeking Alpha