Even though Legal & General Group PLC (LSE:LGEN) shares rose over 10% in the final few weeks of last year, Deutsche Bank said “we believe there is plenty more to go”.
The bank upped its share price target to 295p to 305p, having upgraded its rating on the life insurer to a 'buy' in late November.
This was based on the UK life sector being “unloved over the past few years” but seen as facing positive catalysts skewing for the likes of L&G, where the share performance had made it one of “relative laggards where momentum should be increasingly in their favour”.
At the time, this met some pushback from investors, the bank said, but shares have gained traction.
The belief that the shares can continue to gain is based in part on the new chief executive, former Banco Santander (LSE:BNC) regional chief António Simoes, being “expected to refresh the operational and capital management strategy later in the first half”.
While Deutsche estimates earnings and capital generation can grow at an 8.5% compound annual growth rate out to 2026, analysts at the bank said they see “the possibility for this to push higher, which should support higher [dividend per share] growth”.
On top of this, they forecast up to 15% of the market cap could be available as excess capital, which could be used to pursue inorganic growth or return to shareholders.
The shares, trading on a 9.2% 2025 forecast dividend yield, are “attractively valued”, they added.