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Jefferies has increased its target price for insurer Legal & General (LGEN) on the back of positive earnings growth targets but recognises there are caveats to that growth.
Analyst Mark Cathcart retained his ‘hold’ recommendation and increased the target price from 249p to 253p as ‘the outlook for L&G’s core business looks strong’, with management predicting 10% earnings growth and 7% dividend growth.
‘We recognise a range of caveats for growth and margins, and question the validity of the multi-decade assumption sets that drive L&G’s cash earnings essential for dividend growth,’ he said.
He added that the insurer ‘must rely annually on sizeable bulk and back book deals to retain momentum, where regulatory risk is always at play, and with returns dependent on third-party pricing structures in reinsurance’.
The shares rose 1.7% to 258.2p yesterday.