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On Monday, UBS analyst Nasib Ahmed upgraded M&G PLC (MNG:LN), a UK-based international savings and investments business, from Neutral to Buy, while also raising the price target from GBP2.17 to GBP2.75. The upgrade reflects a positive outlook on the company’s fund performance and its position in private markets.
Ahmed’s decision to upgrade the stock rating follows a review of M&G’s recent deal with Dai-ichi Life Holdings, a Japanese insurance company. This partnership is viewed as a significant factor in enhancing M&G’s cash flow generation and growth prospects. The analyst also noted the company’s strong balance sheet resilience, which contributes to the confidence in management’s ability to deliver on its promises.
In light of the Dai-ichi deal, UBS has also reduced its cost of equity assumption for M&G from 12.25% to 11.75%. This adjustment is based on the expectation that M&G’s strategic initiatives and the Dai-ichi partnership will yield positive results.
Ahmed’s analysis included a sensitivity test to evaluate M&G’s financial robustness in adverse market conditions. The results indicated that M&G would likely maintain its long-term solvency range even under extreme market distress, further supporting the upgraded rating and increased price target.
M&G’s stock rating upgrade and the raised price target by UBS suggest a promising outlook for the company’s performance in the market. The endorsement of M&G’s fund performance, strategic positioning in private markets, and the recent corporate deal with Dai-ichi are key factors influencing this positive assessment.
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