Brighthouse Financial (NASDAQ:BHF)'s shares saw a significant drop on Thursday, following a downgrade by Goldman Sachs from neutral to sell. The insurance company's stock fell by 6.7%, trading at $47.85 as of 1:20 pm Eastern Time.
The downgrade was triggered by Brighthouse Financial's recent multi-year cash-flow disclosure, which demonstrated slower-than-anticipated growth in free cash flow. While the company displayed more stability across various scenarios, financial analysts noted that the increase in free cash flow did not meet expectations.
Analysts further highlighted that the life insurance firm's cash-flow projections failed to account for potential impacts from shifts in economic regulations. This oversight is seen as a risk, given the significant reserve charges observed in other parts of the industry and the substantial amount of soft capital Brighthouse Financial has used to fund its legal entity.
In alignment with the downgrade, Goldman Sachs has also revised its target price for Brighthouse Financial's shares. The new target has been reduced from $47 to $43. This move follows the company's disappointing cash-flow results and potential risks associated with economic regulatory changes.
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