Canaccord downgrades Standard Life to 'hold'

Canaccord Genuity said it was “taking a more cautious view” on the near-term growth outlook at Standard Life, as it lowered its rating on the insurer from ‘buy’ to ‘hold’.

The broker is worried about the firm’s focus areas of UK retail, corporate pensions and its asset management division SLI.

Its new “cautious” stance is a result of weak retail sales across the industry since the third quarter of 2014, lower customer confidence and competitive pricing pressures.

Volatility across investment markets has also reduced the demand for “non-tax wrapped discretionary savings”, it said.

“We also see margin pressure increasing due to growing competition in the retail and corporate pension business, with competitors due to launch new products before April 2015. SL's Wrap platform has higher charges than most of its competitors,”

Meanwhile, despite the recent acquisition of Ignis Asset Management, Canaccord said is expects competition in the multi-asset funds to continue to rise: “Aviva and Invesco Perpetual have both launched similar funds to GARS, run by former fund managers from SLI,” it said.

The broker cut its target price for the stock from 430p to 420p.

The shares were down 0.9% at 401.42p by 10:12 on Thursday.