Shares in Phoenix Group Holdings PLC (LSE:PHNX) fell more than 7% on Monday after the life and pensions consolidator published half-year results that, while strong on operating metrics, triggered some profit taking after leaving some investors more cautious about the outlook.
Analysts at Panmure Liberum described it as “a good set of earnings across the key metrics that matter,” highlighting rising margins across pensions & savings and annuities, as well as a robust balance sheet.
The broker noted that expanding “jaws” between free cash flow and dividends should result in cumulative excess cash by 2027, giving management scope to either accelerate capital returns or reinvest for growth.
But UBS flagged that while operating cash generation of £705 million was slightly ahead of forecasts, total cash generation of £784 million came in 3% below consensus.
Reported net profit also swung to a £156 million loss versus expectations for a modest gain.
The group’s Solvency II coverage ratio improved to 175%, up three points since December, which was a 'beat' to forecasts, but the Swiss bank said this was largely driven by one-off factors.
Lower annuity volumes and the prospect of further negative economic variances in the second half "could drag".
The combination of softer forward guidance, reliance on non-recurring items and shareholder equity running below forecasts appeared enough to outweigh the positives, especially with the shares having last month reached their highest since 2021.
Shares had risen by a third since the start of last year to a four-year peak of almost 700p in August, before dipping in the days before the results.