Numis reiterates 'buy' on Just Group, sees share price overhang evaporating

Numis reiterated its 'buy' rating on retirement specialist Just Group on Wednesday, saying any discount in the share price for a stock overhang is likely to evaporate.

The brokerage noted reports of a 5.5% stake sale by private equity group Cinven on 22 January at 149p per share and said that if this took place, it would clear Cinven's residual holding in the group. This follows on from a 50m share sale by Permira earlier this month, which took its holding down to 17.7% from 23%.

Before that, Cinven sold 93m shares in September at 140p each and both parties sold 95m shares at 130p in March. This means both holders have cut their combined stakes to under 18% from 49% a year ago.

"The latest sale of stock has impacted the share price while the market absorbs it. Investors should now focus on the company's fundamentals and recent achievements, as any discount in the share price for a stock overhang is likely to evaporate," said Numis.

It pointed out that the company has maintained pricing discipline, which along with growing volumes and cost savings has seen its margins rise from 3.3% pro forma in 2015 to 8.9% in the first half of 2017. In addition, it has improved its Solvency II capital ratios from 136% to 150% and achieved an A+ IFS rating from Fitch.

At 1615 GMT, the shares were up 1.8% to 149.70p.