Hold Rating Maintained for Great-West Lifeco Due to Empower Segment’s Comparable Growth and Profitability Challenges

Analyst Tom Mackinnon from BMO Capital maintained a Hold rating on Great-West Lifeco and keeping the price target at C$56.00.

Tom Mackinnon’s rating is based on several factors, primarily focusing on Great-West Lifeco’s Empower segment. While Empower has demonstrated strong growth, doubling the industry’s rate in some areas, its overall performance is largely in line with its main competitors such as Fidelity, Vanguard, and Voya. The organic growth in Empower’s assets and participants is comparable to these peers, which suggests that while the growth is robust, it is not significantly outperforming the market.
Additionally, Empower’s margins and revenue metrics are lower than those of its peers, which affects the overall profitability. The company’s valuation appears full, and there are challenges related to earnings visibility in certain segments, particularly in Europe and Capital & Risk Solutions. The reliance on Empower as a primary growth driver, despite potential support from acquisitions, adds an element of uncertainty, leading Mackinnon to maintain a Hold rating for the stock.