Standard Life PLC (LSE:SL.) has received a target price upgrade from JPMorgan, which said investor concerns about capital returns, retail growth and earnings quality may be overdone following the agreed acquisition of Aegon UK.
Analyst Farooq Hanif reiterated an 'overweight' rating on the life insurer and wealth manager and increased his target price to 975p from 950p.
JPMorgan said the strategic rationale for the deal "appears broadly understood" by investors, highlighting expected cost synergies, greater scale in the UK workplace pensions market and the removal of concerns around debt leverage.
However, discussions with investors suggested three key debates remained: the scale of future capital returns, whether Standard Life has a genuine competitive advantage in UK retail savings and the sustainability of management actions supporting cash generation.
Hanif has a positive view on all three issues. Firstly, he expects Standard Life to undertake recurring annual share buybacks of £200 million from 2027 and forecasts dividend growth of around 5% a year, equivalent to dividend per share growth of roughly 7%.
The changes have prompted the broker to increase earnings forecasts by around 3-4.5% between 2028 and 2030.
JPMorgan's operating profit forecasts are now 8%-10% above Bloomberg consensus estimates for 2027 and 2028, reflecting a more optimistic view of the group's ability to generate earnings growth and shareholder returns following the Aegon UK transaction.
