Standard Life "attractively priced" after strong 2014 results, says Panmure

Panmure Gordon has reiterated its ‘buy’ recommendation for Standard Life after the insurer beat forecasts with its 2014 results on Friday, saying it expects the shares to rally.

“We believe that the shares are attractively priced and yet trade on a 2015 forecast dividend yield of 4.4% excluding the Canadian special dividend,” said analyst Barrie Cornes.

“These results were ahead of expectations and we anticipate that the strong underlying performance that suggests that there is real momentum within the business should see the shares rally in the short to medium term.”

Standard Life reported a 19% increase in operating profit before tax from continuing operations to £604m, 12% ahead of Panmure’s £539m forecast and 8% ahead of consensus at £559m.

The 7.8% increase in the full-year dividend to 17.03p was also better than the market had been expecting.

While Standard Life guided to lower new business profit from UK annuities owing to changes announced in the March 2014 Budget, Cornes pointed out that the company has never been a big UK annuity writer.

He said: “We think that being the leader in the income drawdown market positions Standard Life very well for the proposed changes that take effect in April 2015.”

The broker has a 465p target price for the stock, which has up 2.3% at 417.7p by 11:50.