Standard Life Aberdeen share price: JPMorgan Cazenove points to ‘hidden value’ potential

on Sep 8, 2017
Updated: Mar 11, 2020

JPMorgan Cazenove has kicked off coverage of Standard Life Aberdeen (LON:SLA) with an ‘overweight’ rating, arguing that the enlarged group had the potential to unlock ‘hidden value’. The comments come after Standard Life recently completed its £11-billion merger with former smaller London-listed peer Aberdeen Asset Management.

Standard Life Aberdeen’s share price lost ground in London in yesterday’s session, with the European Central Bank’s move to keep its massive stimulus programme unchanged weighing on financials. The shares closed 1.01 percent lower at 413.50p, underperforming the broader UK market, with the benchmark FTSE 100 index ending the session 0.58 percent higher at 7,396.98 points.

JP Morgan Cazenove initiated coverage of Standard Life Aberdeen with an ‘overweight’ rating yesterday, and a price target of 540p on the shares, arguing that the merged group is a more diverse business offering growth potential and even the potential to ‘unlock hidden value’.

“Over the past decade, Standard Life’s UK pensions business has posted net inflows in every quarter, reflecting structural growth in the UK savings market, which we believe will continue to provide an attractive source of AUA [assets under administration] and earnings growth,” the analysts pointed out, as quoted by Sharecast.

The potential for hidden value meanwhile ‘could come’ from factors such as deploying the circa £500 million of excess capital, a potential disposal of non-core UK annuities business, or an initial public offering of the near-£2.2-billion Indian life insurance joint venture that would ‘make its valuation more visible in a sum of the parts’.

The 16 analysts offering 12-month price targets for Standard Life Aberdeen for the Financial Times have a median target of 459.50p on the shares, with a high estimate of 520.00p and a low estimate of 355.00p. As of September 7, the consensus forecast amongst 20 polled investment analysts covering the blue-chip group has it that the company will outperform the market.  

As of 08:07 BST, Friday, 08 September, Standard Life Plc share price is 364.05p.