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(Sharecast News) - Analysts at Berenberg nudged up their target price on UK life and pension consolidator Chesnara from 328p to 333p on Friday following the group's first-half earnings a day earlier.
Chesnara reported 37m H1 cash generation on Thursday, 26% up on H124, a 207% Solvency II ratio, up 203% at its FY24 year-end position, and raised its interim dividend by 3% to 7.7p per share, in line with its annual 3% 20-year DPS growth track record. In addition, Chesnara also updated its guidance for solvency and leverage proforma for the impact of the HSBC Life UK 260m acquisition and for the related financing.
Berenberg, which has a 'buy' rating on the stock, said its new proforma estimates were that Chesnara's leverage ratio would be 25%, down previous guidance of 29%, which excluded the 150m RT1, and that the group's solvency ratio would be 198%.
The German bank updated its forecasts to include the impact of the HSBC Life UK deal and the related financing, stating HSBC Life UK will add over 800m to Chesnara's total cash generation, of which 140m will come in the first five years.
"We estimate that this means that there will clearly be enough cash generation to fund Chesnara's 3% annual DPS growth that we estimate for the next 20 years," said the analysts.
Berenberg added that Chesnara offers an 8.4% FY26 calendar year yield growing at 3% per annum.
"We value Chesnara conservatively on a dividend discount model at 333p per share, and the HSBC UK Life 800m cumulative cash provides comfort that the 3% pa growth is sustainable." it said.
Citi hiked its price target on Rolls-Royce to 1,101p from 641p on Friday, citing three main factors.
The bank, which maintained its 'neutral' rating on the stock, increased its 2025 profit forecast by 23% and 2029 by 28%, while its free cash flow forecasts also increased, up by 13% this year and rising to 20% in 2029.
Citi also pointed to an increased mid-term (2030-34) implicit profit growth assumption from 4% to 8%, broadly in line with expected fleet growth. Finally, it noted around 40p of value for SMR.
"Rolls-Royce may look expensive on profit multiples, but it is in line on cash metrics, which we believe more important," Citi said. "We forecast 12.3% profit compound annual growth rate over 2025 to 2030 and cash conversion peaking at 120% before trending down to 114%, which we use for our valuation."