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On Tuesday, JPMorgan upgraded Sampo Oyj (SAMPO:FH) (OTC:SAXPY) stock from Neutral to Overweight, adjusting the price target upward from €8.00 to €10.50. The firm’s analysts cited several reasons for the positive outlook on the Nordic insurance company, including anticipated capital returns and earnings growth.
Sampo Oyj has undergone a transformation to become a pure-play property and casualty (P&C) insurer, which has led to its stock re-rating in line with its Nordic peers. JPMorgan analysts believe there is still potential for further re-rating. They anticipate the company will surpass its capital generation target of more than €4.5 billion for the period of 2024-2026, projecting an estimate of €5.2 billion.
The analysts expect that this strong capital generation will bolster medium-term capital returns. They forecast a share buyback program of €400 million to be announced in the summer, with the possibility of an increase to around €500 million for the fiscal year 2026, which is approximately 30% higher than the consensus.
Sampo Oyj’s diversified presence in the Nordics and the UK was highlighted as a key factor in providing earnings resilience. This geographical spread is particularly advantageous given the current regulatory environment, especially in Denmark. Moreover, it offers a buffer against the competitive UK motor market.
In terms of future earnings growth, JPMorgan projects a compound annual growth rate (CAGR) of approximately 10% for Sampo Oyj from 2025 to 2028, outpacing the estimated 6% for the sector index (SXIP). The analysts also look forward to the realization of synergies from the company’s acquisition of Topdanmark, which is expected to contribute to the growth trajectory.
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