Broker tips: Legal and General, St James's Place
By Iain Gilbert
Date: Tuesday 12 Aug 2025
(Sharecast News) - RBC Capital Markets reiterated its 'underperform' rating on Legal & General on Tuesday and cut its price target on the stock to 200p from 220p.
The Canadian bank, which pointed to "headwinds aplenty", said it was now "incrementally more cautious" on the outlook following Legal & General's first-half results.
"While it reported modest headline beats on core operating EPS and operational surplus generation, these results were supported by a number of lower persistency items, while there were also unexpected negative developments to the IFRS balance sheet," RBC said.
"Further, Pension Risk Transfer profitability headwinds remain, although this is tempered in the short-term by 'management actions', while asset management fee-related earnings and retail earnings growth outlooks appear weaker."
RBC also highlighted that Legal & General's price-to-book value versus return on equity now compares even less favourably versus peers.
Analysts at Berenberg raised their target price wealth management firm St James's Place from 1,300p to 1,650p on Tuesday, stating the group was "stepping into the light".
Following better-than-expected interim results, as well as updating for market moves, Berenberg hiked its diluted cash earnings per share estimates for St James's Place by 31% this year and by 13-14% for FY26-27.
"This was a robust statement, while the return to shareholders - through an increased buyback - of the £63m (post-tax) release from the ongoing service evidence provision also evidences management's intent to run the business in a capital efficient manner," said the German bank.
Berenberg, which has a 'buy' rating on the stock, also noted that as well as increasing its estimates for underlying cash earnings, it also upped its total payout estimates from 50% to 70% from FY27 onwards.
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