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On Tuesday, JPMorgan updated its outlook on Just Group PLC (JUST:LN), increasing the price target to £2.00 from the previous £1.90 while maintaining an Overweight rating on the stock.
This adjustment follows the company's recent announcement of a significant £1.8 billion Pension Risk Transfer (PRT) deal in the UK. Notably, 60% of this deal is reinsured with Brookfield.
The PRT deal marks a significant achievement for Just Group, as it represents the company's first foray into the competitive market of schemes valued at over £1 billion—a segment that dominates the UK's PRT landscape by value. The firm's success in smaller-scheme deals has established a solid reputation, which it can now leverage to expand its market share in this larger segment.
JPMorgan's analysts have also revisited their projections for the UK retail annuity market and have subsequently raised their growth estimates for Just Group's performance in this sector. Just Group, which specializes in writing retail and bulk annuities, currently trades at approximately 50% of its tangible book value.
This valuation includes comprehensive equity, inclusive of the Contractual Service Margin (CSM), for the year 2024 estimates. Despite Just Group's stock price having already increased by more than 60% this year, the firm believes there is potential for further growth.
The analyst highlighted the importance of the PRT deal for Just Group, stating, "Just Group's announcement that it has just written a £1.8bn Pension Risk Transfer (PRT) deal in the UK (although 60% reinsured with Brookfield), is a milestone for the company." They further emphasized the company's capacity to grow in the larger market segment and the revision of their estimates for Just Group's growth, reinforcing the Overweight rating.
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