Unum (UNM) Stock Forecast & Price Target

Unum Group has demonstrated a positive outlook due to substantially higher interest rates enhancing the profitability of its long-term care (LTC) business, which is expected to improve its free cash flow generation. The internal reinsurance transaction that liberated approximately $630 million of capital, combined with the company’s strong capitalization and diverse product offerings, has positioned Unum Group favorably within its market. Furthermore, the supportive employment market for group benefits operations reinforces the potential for sustained growth and improved margins, contributing to a robust overall financial health for the organization.

Unum Group faces a negative outlook primarily due to the anticipated decline in earnings per share (EPS) estimates, projected to decrease by approximately 2% in 2025, influenced by pressures from higher mortality and morbidity rates that threaten core business margins. The company's reliance on individual disability insurance (IDI) and long-term care (LTC) sectors compounds this risk, with a $40 million pre-tax earnings reduction expected over a five-year period from ceded blocks and lower long-term interest rates further jeopardizing its capital levels and earnings power. Additionally, the potential for recession or increased unemployment poses significant threats to Unum's growth outlook and overall margin stability, which could adversely affect its valuation.