JPMorgan has "double-upgraded" insurer and financial services firm Standard Life PLC (LSE:SL.), moving to ‘overweight’ from ‘underweight’, arguing its planned acquisition of Aegon UK turns a former balance sheet concern into a potential earnings catalyst.
Analysts for the American bank also raised their price target to 950p from 620p, and described the transaction as “a win-win” for both buyer and seller.
The sale of Aegon UK to Standard Life is “highly likely to receive regulatory approval” and should prove “very positive” for both companies, analyst Farooq Hanif said in a note.
For Standard Life, JPM said the deal removes its previous concerns over the balance sheet, is accretive, and carries “the potential to beat consensus”. The broker also pointed to further upside from Standard Life’s track record of exceeding acquisition synergy guidance.
Aegon also comes out well, according to the bank. JPM said the Dutch insurer sold the UK business for a higher price than expected and could benefit from future synergies through its roughly 15% shareholding in Standard Life.
The broker at the same time reiterated its ‘overweight’ rating on Aegon and lifted its target price to €9.45 from €8.40, citing a clearer sum-of-the-parts profile and “attractive valuation upside potential”.