Abacus Life Inc (NASDAQ:ABL) is gaining traction among analysts as it transitions from a life settlements firm into a broader asset management player.
Analysts at Autonomous Research, Northland, and Piper Sandler see the alternative asset management company as significantly undervalued, with a strong market position, growing revenue streams, and potential for valuation upside.
Abacus Life is a leading buyer of life insurance policies and alternative asset manager specializing in life settlements. The Orlando-based company operates by purchasing life insurance policies from policyholders who no longer need or want them, offering a cash payout that is typically higher than the policy’s surrender value. Abacus then manages these policies as an investment asset, generating returns from policy maturities.
Now, Abacus is expanding beyond its core life settlement business into alternative asset management, growing its assets under management (AUM) and fee-based revenue streams. Recent acquisitions, including Carlisle Asset Management and FCF Advisors, have positioned Abacus as a more diversified financial services firm.
Evolving business model
Autonomous Research recently initiated coverage on Abacus Life with an "Outperform" rating and a $12 price target, citing its shift toward an asset management model.
"We see Abacus as a hybrid between a specialty finance firm and an alternative asset manager, which could lead to multiple expansion as investors recognize its evolving business model," Autonomous Research analysts wrote.
While Abacus has traditionally focused on buying, managing, and trading life insurance policies, the firm is set to derive around 20% of its earnings from asset management fees by the first quarter of 2025. Analysts believe this will allow investors to apply a higher valuation multiple, akin to alternative asset managers.
Northland named Abacus a top pick for 2025, pointing to the company’s acquisition of Carlisle Asset Management and FCF Advisors, which added more than $2.6 billion in assets under management (AUM).
"Abacus has positioned itself as a dominant player in the life settlements space while expanding into asset management,” analysts noted. “The market has yet to fully appreciate the synergies from these acquisitions.”
Piper Sandler echoed the bullish sentiment, highlighting Abacus’ strong fundamentals, including a 50% adjusted EBITDA margin and 15-20% return on equity.
"With a scalable platform and a proven ability to deploy capital efficiently, Abacus is well-positioned for sustained growth. The company has also improved its shareholder base and increased trading liquidity, which should enhance valuation over time," Piper Sandler analysts noted.
Multiple growth catalysts
Analysts see significant upside for Abacus’ stock, which trades at approximately 8x its estimated 2025 adjusted EBITDA—lower than mid-cap asset management peers at 11x. Northland has set a higher price target of $13.50, based on 13.5x estimated 2025 adjusted EBITDA of $90.2 million.
"The current valuation does not reflect Abacus’ ability to generate recurring fee-based income, which should lead to a re-rating in the stock," Northland analysts wrote.
Among the factors contributing to potential multiple expansion are the company’s ABL Tech and ABL Wealth divisions. Piper Sandler noted that the market has yet to fully recognize the earnings potential from these business lines. "As Abacus demonstrates consistent fee-based revenue growth, we anticipate a higher valuation multiple in line with alternative asset managers," Piper Sandler added.
Looking ahead
Abacus has several near-term catalysts, including the imminent launch of a 40-Act life settlements fund, the profitability of its tech platform, and the possibility of becoming a takeout target due to its positioning as a "fixed-income replacement" asset.
"With strong execution, expanding AUM, and an attractive valuation, Abacus is a compelling investment opportunity for 2025 and beyond," Autonomous Research concluded.