Deutsche Bank upped its recommendation on shares of Standard Life Aberdeen on Thursday to ‘buy’ from ‘hold’ and lifted the price target to 335p from 310p.
It said SLA has been through the trenches since its merger but the new chief executive and new group targets offer a clear focus as to how the current headwinds can be addressed.
“Even on our assumption of only partial delivery, we now see core fund management profits doubling over the next three years – with further upside in 2024. This in turn implies a 33% uplift to our 2023 estimated profit forecast,” it said.
“While we recognise that we could be a little early given that the improved earnings will only begin to emerge next year, we believe that net flows have already started responding to an improved investment performance.”
Extra evidence of this in the next few months skews the risk more towards the upside than the downside, it added.
“Meanwhile, the valuation (a look-through price-to-earnings of just 7.4x on the core business) appears to give no credence to a possible recovery,” DB said.
At 1030 GMT, the shares were up 2.4% at 289.20p.