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Berenberg lifts target price for M&G but keeps 'hold'
(Sharecast News) - Berenberg has hiked its target price for life insurance group M&G from 208p to 225p after updating its estimates for the IFRS 17 accounting adjustments. "M&G is one of the few companies in the insurance sector that has benefited from the transition to IFRS 17 as the standard allows M&G to recognise a greater portion of future shareholder transfers from its with-profits fund within shareholders equity, relative to the old standard," said analyst Thomas Bateman.
"This process is essentially bringing forward profit recognition on M&G's with-profits business, whereas IFRS 17 has had the opposite impact on the annuity portfolios of its peer group, with profit recognition being deferred."
However, the broker has kept a 'hold' rating on the stock, which trades at 8.5 times 2025 earnings for a 2024 estimated dividend yield of 9.3%.
Berenberg said it would turn more positive on M&G if retail asset management net fund flows show consistent positive trends, "which would likely lead to more optimistic commentary on the dividend from management".
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