Goldman Sachs initiates coverage on M&G at 'buy'

M&GSharecast graphic / Josh White

M&G

201.30p

10:15 22/11/24

-0.30%

-0.60p

Analysts at Goldman Sachs initiated coverage on investment manager M&G with a 'buy' rating and 240.0p target price on Tuesday, stating it had "attractive growth, capital returns, and valuation".

Financial Services

17,167.77

10:14 22/11/24

0.36%

62.14

FTSE 100

8,202.46

10:15 22/11/24

n/a

FTSE 350

4,521.44

10:15 22/11/24

n/a

FTSE All-Share

4,477.51

10:15 22/11/24

n/a

Goldman Sachs noted that M&G operates three main segments - Asset Management, M&G Wealth, and Heritage. It said these were interconnected and, in its view, provide "attractive synergies".

"M&G is an asset manager with a large balance sheet which allows the firm to seed assets and helps to drive inflows, while also generating sufficient capital to cover its dividend and deleverage over time," said the analysts.

GS also highlighted that M&G trades on a 10.3% one-year average next twelve-month dividend yield, higher than the UK life peer average of 8.9%.

"This discount is unjustified in our view given M&G’s diversified business mix, the quality of PruFund, leverage reduction and capital-light growth potential," said Goldman.

Reporting by Iain Gilbert at Sharecast.com