(Sharecast News) - Analysts at JP Morgan upgraded their recommendation for shares of Standard Life Aberdeen from 'neutral' to 'overweight' after analysing the various avenues at the new chief executive officer's disposal to close the valuation gap versus rivals.
From amongst those possible areas for improvement, the investment bank noted a possible reduction in the dividend payout, given that the insurer's was the highest in the top flight index and improved disclosure and efficiency in its Platforms and Wealth business.
Non-organic growth was another possible path, JP Morgan said, arguing that Standard Life could reinvest surplus capital from the sale of HDFC Life to accelerate growth at its Aberdeen Standard Investments unit via acquisitions.
Indeed, the then current share price for Standard Life implied a price-to-earnings multiple of just five for ASI, versus the European Asset Management sector on 12 times' earnings.
"Hence we see opportunities to close this gap."
Even after lowering their estimates for the firm's dividend yield to in financial years 2020/21, that still left the shares sporting a roughly 7% yield, JP Morgan pointed out, in comparison to 3.5% for FTSE 100 constituents on average.
JP Morgan also nudged up its estimates for earnings per share in 2020-21 by 2% and 1%, respectively.
All told, the target price was raised from 255.0p to 270.0p.
(Sharecast News) - Top investors in Glaxo Smith Kline are piling pressure on Dame Emma Walmsley after the activist New York hedge fund Elliott Management was revealed to have built a significant stake. Two top-20 investors in the drugs and consumer goods giant said that the chief executive's future was in doubt after four years of disappointing performance. One top-20 investor said there was "no desire to protect her" among institutional shareholders. Another said that Walmsley, 51, should step aside after her plan to break the business in two is carried out and hand over to her lieutenant, Luke Miels. - Sunday Times