Chesnara is “ready for further M&A” according to the research house Hardman thanks to the life and pensions consolidator’s “excellent” cash generation.
Analysts noted that while 2022 results came in behind its estimates, acquisitions, including that of Sanlam Life & Pensions, should “contribute more going forward.”
As a result, the broker raised earnings per share (EPS) estimates for 2023 to 29.7p from 29.1p, with 2024 EPS estimates of 31p.
While last year was heavily impacted by weak and volatile equity markets, the group’s cash generation was still “excellent.”
Hardman noted that base generation for the group was £82.7mln, compared with £20.3mln in 2021.
Looking ahead, the broker still anticipates risks.
“Ultimately, the company remains tied to movements in financial markets and adverse developments in operational areas,” the broker said.
“Having just come through a testing period for the latter, in particular, we can see how well Chesnara can manage these challenges.”
Last month, the group released 2022 results where it proposed a 3% increase to the full-year dividend.
A target price of 305p has been set.