Citigroup rates the insurance and pensions group “hold / medium risk” with a target price of 200p – a reduction of 18p as the broker expects lower earnings in the coming year. Citi thinks profit momentum will weaken this year, with significant capital expenditure and margin pressures set to dampen growth. The broker is also concerned that Standard Life’s financial adviser-led distribution could price it out of certain products.
UBS has downgraded the insurance vehicle to “neutral” with a 12-month target price of 300p. The broker has adjusted its stance now that Resolution has scaled back its M&A activity, and thinks the firm’s operating performance is not improving as expected. UBS has calculated that the firm could pay a 109p special dividend and remain within its target gearing range, though it would still be at a higher price to earnings ratio than peers.
Deutsche Bank maintains its “buy” rating with a target price of £21 ahead of the hotel and coffee shop owner’s final results on 28 April. The broker forecasts strong full-year figures, with both like-for-like sales and expansion driving profits. Deutsche also expects a double-digit increase in the dividend, but isn’t expecting big strategy changes. The broker dismisses concerns about cost inflation hitting Costa as a “storm in a coffee cup”.