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(Sharecast News) - Analysts at RBC Capital Markets lifted their target price on Standard Life to 970p from 885p on Wednesday, saying upgraded forecasts and a stronger longterm outlook justified the increase.
RBC Capital said its postresults revisions reflected Standard Life's newly announced PRT partnership and operational improvements across pensions and savings, raising group adjusted operating profit forecasts by about 2% on average over FY26-29.
The Canadian bank also kept its aboveconsensus expectation for £350m of recurring share buybacks from FY26, noting a payout ratio close to 90% and arguing that consensus estimates were likely to move higher ahead of the 30 November capital markets day.
RBC, which reiterated its 'sector perform' rating on the stock, highlighted a positive tone at Standard Life's CFO roundtable, with discussion focused on retaining workplace customers postretirement and on capital allocation. It said management had indicated intrinsic value of more than £10bn on a proforma basis following the Aegon deal and the PRT partnership, with future buybacks to be balanced against investment opportunities and a target for holdingcompany cash above £500m.
On the PRT partnership, RBC incorporated Standard Life's plan to deploy £500m of capital over five years, assuming £100m of annual annuity capital strain split 30/70 across the halves. Fee income on guided volumes of £5 to £7bn a year will be recognised through the contractual service margin, with economics similar to the existing PRT business. A gradual rampup is assumed, starting at £5bn in FY27 and rising to £6bn by FY29.
RBC added that much of the enhanced growth outlook was already reflected in Standard Life's valuation, with the shares trading on around 14x FY26 earnings, a premium to UK life peers.
Reporting by Iain Gilbert at Sharecast.com
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