Voya Financial (VOYA) is positioned to "meaningfully rebound" from 2024 as its strategic initiatives take hold, setting up an "attractive growth profile in 2026 and beyond," Morgan Stanley said Friday in a note.

The investment firm cited improving performance across key segments and confidence in management's execution of integrations, investments, and segment improvements.

While 2024 full-year Earnings per share of $7.25 fell short of the company's guidance of $8.25 to $8.45, Morgan Stanley noted that Voya's Q4 earnings call outlined a "sensible turnaround strategy" that reinforces its long-term growth potential.

The firm highlighted improvements in Health Solutions, where management has "followed through on plans to improve performance via new pricing and improved risk selection." Stop-loss underwriting normalization could come as soon as 2026, according to the note.

In Wealth Solutions and Investment Management, Voya expects core business growth, supported by steady margins of 35% to 39% in Wealth and about 29% in Investment Management.

Morgan Stanley acknowledged execution risks, particularly in integrating OneAmerica in Wealth Solutions and stabilizing Health Solutions. However, it believes management's turnaround efforts are already in motion and should drive stronger capital generation and earnings growth over the next two years.

The firm upgraded Voya's rating to overweight from equal-weight and raised the company's price target to $87 from $76.

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