Analysts at Jefferies have maintained their buy rating on the newly-merged Standard Life Aberdeen despite the potential loss of a major £109bn mandate.
In a note to investors this week, Jeffries says it does not have to revise its modelling from mid-March, when it predicted a positive future for the firm amid a battle to hold on to Scottish Widows’ funds and the sale of its life business to Phoenix.
While Jefferies is predicting a slight fall in earnings per share in the short-run, it notes that SLA could recover by buying back shares.
The note reads: “SLA now becomes a fee-based business, gains a strategic partner and strengthens its financial position allowing it to ‘accelerate’ its growth strategy…SLA is a value play in our view”.
The prediction from Jefferies is that post-tax profits for 2019 will fall by £93m, assuming the loss of the Scottish Widows mandate in the first half of the year, but by 2021 they will rebound to reach £882m, up from £705m currently.
However, the analysts note that investors still lack clarity on how proceeds from the sale of SLA’s life business would be used.