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On Tuesday, Deutsche Bank (ETR:DBKGn) analyst Oliver Steel adjusted the price target for Just Group PLC (JUST:LN) shares from GBP1.85 to GBP1.80, while reiterating a Buy rating on the stock. The revision followed a significant decline in the company’s share value, which dropped approximately 13% over the previous two days.
The decrease in Just Group’s share price was attributed to two primary factors: the absence of forward earnings guidance and a shortfall in the forecasted FY24 operating earnings per share (EPS), which was impacted by higher costs and worse variances than anticipated. Despite these setbacks, Steel expressed a belief that the market’s reaction might be an instance of profit-taking after Just Group’s strong earnings performance over the past three years and notable share price appreciation over the last 18 months.
Steel’s commentary underscored his view that the market is undervaluing Just Group’s positive investment thesis for the future. He projected that the company would maintain double-digit growth in sales and underlying profit for the next three years. Furthermore, he highlighted Just Group’s robust solvency ratio and the potential for new product offerings to contribute to earnings after this decade.
The analyst also pointed out that Just Group’s stock is currently trading at 0.5 times its estimated 2025 price to tangible net asset value (P/TNAV), which contrasts with a 15% return on equity (RoE) and a 25% upside to the revised 180p target price. Based on these assessments, Deutsche Bank maintained its Buy recommendation for Just Group shares.
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