Aflac Forecast Leads Morgan Stanley Target Cut, Long-Term Outlook Stable By Investing.com

Investing.com– Morgan Stanley (NYSE:) lowered its price target for Aflac Inc (NYSE:) on the weaker-than-expected margin guidance announced during the company’s analyst briefing.

The broker lowered the price target to $107 from $110 but maintained an Equal-weight rating on Aflac.

The revision stems from Aflac’s new guidance for its operations in Japan and the U.S., which brought lower margin expectations, Morgan Stanley analysts said. Management attributed the changes to a strategic focus on long-term growth.

In Japan, the margin decline is linked to efforts to attract younger customers, reinvestment for growth and a normalization of margins. Meanwhile, U.S. operations are under pressure from higher performance ratios and cost increases related to growth initiatives.

Analysts at Morgan Stanley have adjusted their profit forecasts accordingly, cutting Aflac’s earnings per share (EPS) estimates by 4% to 7% between 2025 and 2027.

While the updated guidance underscores Aflac’s growth-focused strategy, it also introduces uncertainty into the investment thesis, particularly for those prioritizing near-term margin stability, the research note said.

Despite these concerns, Morgan Stanley maintained its Equal-weight rating, emphasizing that the company’s long-term prospects remain favorable. Aflac’s leadership remains focused on leveraging demographic trends such as aging populations and rising healthcare costs to drive growth in both Japan and the U.S., according to the brokerage firm.

The insurer also wants to capitalize on its competitive advantages, including strong brand recognition and robust distribution channels. Analysts acknowledged these strengths, but noted that it could take some time for the market to fully realize Aflac’s long-term growth potential.

While Aflac stock may face near-term headwinds, its strategic focus on sustainable growth remains a promising narrative, analysts added.