JPMorgan ups Legal & General to 'neutral' after de-rating

(Sharecast News) - JPMorgan Cazenove upgraded its stance on Legal & Geneal to 'neutral' from 'underweight' on Monday, lifting the price target to 285p from 239p on management delivery and following a de-rating of the shares.The bank said management continues to deliver on its growth plans, supported by a growing annuities business and consistent positive net inflows in asset management. In addition, even though the stock has done well year-to-date, it has de-rated from 15x one-year forward price-to-earnings in 2015 to 11x, partly driven by increasing asset risk from the growing bulk annuities business and partly by Brexit-related uncertainty."In our view, as long as credit markets and/or the UK economy remain benign, the growth in earnings and cash flows could continue as LGEN remains well placed to capture the growth from bulk annuities and asset management," it said.JPM also pointed out that the Solvency II ratio has improved from 163% in the first half of 2016 to 190% currently, in line with the bank's strategy view to add to UK domestics and providing an additional cushion to absorb macro shocks.JPMorgan said it wasn't moving to an 'overweight' rating as it remains cautious around tail risk from the bulk annuities business while free cash flows remain marginally low at around 8.5% pre capital strain and 6.5% net, versus a sector average of 9%.At 1300 GMT, the shares were up 0.8% to 284.20p.