Manulife Estimates Moderated

Manulife Financial Corporation’s (MFC - Analyst Report) 2Q08 earnings came in below our expectation, reflecting weaker U.S. and Hong Kong equity markets and a strong Canadian dollar. Nevertheless, the company reported robust growth in sales in almost every line of its business, contributing to excellent growth in new business embedded value even in the midst of very volatile and unsettled markets worldwide.

Manulife’s diversified and enhanced distribution capabilities, along with its strong market positioning globally, give it a distinct competitive advantage over its peers. We anticipate strong sales and earnings growth trends, strong capital position, and diverse operating platforms to benefit the company, going forward and hence reiterate our Hold recommendation.

Based on 2Q08 results, we are moderating our FY08 and FY09 earnings expectation to $2.53 per share and $2.95 per share respectively, from $2.80 per share and $3.40 per share per share previously. Manulife currently trades at 13.9x our 2008 earnings estimate and 2.27x its 2Q08 book value of $15.28 per share, both of which are at substantial premiums to the industry median multiples.

Our six-month price target of $36.70 per share, reflects a 2.30x price to book value multiple of our book value estimate of $15.95 per share at December 31, 2008, which implies a return of 6.3% from the current stock price.

Read the full analyst report on MFC

Read the full analyst report on MFC