Brighthouse Financial (NASDAQ:BHF) witnessed a notable decline in its stock value on Thursday, as a consequence of a downgrade by Goldman Sachs, shifting its rating from ‘neutral’ to ‘sell’. The insurance company’s shares plummeted by 6.7%, closing at $47.85 as of 1:20 PM Eastern Time.
The impetus for this downgrade can be attributed to Brighthouse Financial’s recent disclosure of its multi-year cash flow projections, revealing a growth rate that fell short of expectations. While the company displayed commendable stability across various scenarios, financial analysts pointed out that the surge in free cash flow didn’t align with market anticipations.
Analysts further underscored that the life insurance firm’s cash-flow forecasts omitted accounting for potential repercussions stemming from alterations in economic regulations. This omission is deemed risky, especially in light of significant reserve charges observed within other sectors of the industry and the substantial employment of soft capital by Brighthouse Financial to support its legal entity.
In tandem with the downgrade, Goldman Sachs has also revised its target price for Brighthouse Financial’s shares, lowering it from $47 to $43. This adjustment is a response to the company’s disappointing cash-flow performance and the perceived risks associated with potential shifts in economic regulations.
