Mizuho has revised its price target on Aflac Inc. (NYSE: AFL) upward to $107.00 from $104.00 while maintaining an Underperform rating on the insurance company's stock. The new target remains below Aflac's most recently reported trading price of $113.20, a gap Mizuho says implies an expected negative return for shareholders over the coming period.
Valuation and return outlook
The 3% increase in the price target primarily reflects a valuation roll-forward, according to Mizuho. Even with the higher target, the firm projects a negative 6% return for Aflac's shares. That outlook is noteworthy given the stock's solid performance over the past year, which has produced a 15.6% price gain.
Drivers behind the revision
- Lower benefit ratio in Japan: Mizuho cites a reduction in the benefit ratio in Aflac's Japanese operations as a favorable development that supports the higher target.
- Share repurchases: Increased buybacks by management also contributed to the change. Mizuho's modeling incorporated greater repurchases, and InvestingPro data corroborates that management has been aggressive in repurchasing shares, a factor that supports the company's reported 13% return on equity.
These positives helped push Mizuho's 2026 earnings per share estimate up by 1% to $7.35.
Offsets and headwinds
Partially offsetting those favorable items, Mizuho noted two material headwinds:
- Net investment income pressure: Lower floating interest rates have diminished net investment income, weighing on the insurer's profitability.
- Currency effects: A weakening Japanese yen versus the U.S. dollar has increased the currency drag on results.
The firm trimmed its 2027 EPS estimate by 1% to $7.75. Mizuho also indicated that its 2026 and 2027 estimates remain consistent with consensus forecasts.
Capital return and income appeal
Aflac's market capitalization is reported at $58.7 billion. The company offers a dividend yield of 2.08%, a level that may be of interest to income-oriented investors even as earnings and investment-income dynamics create uncertainty.
Recent quarterly results
In its fourth-quarter 2025 report, Aflac posted diluted earnings per share of $1.57, below the consensus expectation of $1.70, a miss equivalent to a 7.65% downside surprise. Revenue for the quarter, however, came in at $4.87 billion, ahead of the $4.28 billion forecast, representing a 13.79% upside surprise. Market commentary following the release has noted the tension between the EPS shortfall and stronger-than-expected sales, and analysts had not enacted upgrades or downgrades in the immediate aftermath of the report.
Investor takeaways
Mizuho's adjustment leaves the stock trading above the firm's target and portrays a mixed picture: operational and capital-return improvements on one hand, and investment-income and currency pressures on the other. Investors and market participants will likely monitor subsequent quarterly updates and any changes to buyback or capital-return programs for clearer signals on near-term earnings trajectories.