Phoenix Group Holdings PLC

Phoenix Group Holdings PLC (LON: PHNX) is an FTSE 100 index listed provider of insurance services in the United Kingdom.

The company is also expected to announce its H1 FY22 results on 15 August 2022.

Recent News

On 04 August 2022, the Group has announced about the acquisition of Sun Life UK, for a cash consideration of £248 million. 

Rating Rationale – SELL at GBX 669.60

• Profit Booking: The company’s share price reflected a jump of ~14.00% in the past 1 month and presents a case of profit booking.
• Interest Payments: The Group paid a debt interest of £250 mn in FY21, compared to £184 mn in FY20.
• Overvalued Multiples: On a TTM basis, the company has reported EV/EBITDA multiple of 9.6x, compared to Industry median of 7.9x (Insurance).
• Technical Indicator: The stock of the company has surpassed its upper Bollinger band with a 14-day high RSI level of ~73.98, indicating an overbought stance.

One Year Share Price Chart

Valuation Methodology: Price/Earnings Approach (FY22E) (Illustrative)

Conclusion

Considering the news of acquisition, the company might trade at a slight premium to its peers’ Price to Earnings multiple average. Given the attractive notional gains in the short-term, overvalued multiple, bearish technical indicators, coupled with unfavourable Valuation, a "Sell" recommendation has been given on the stock at the current market price of GBX 669.60, as on 04 August 2022, at 08:30 AM GMT+1. 

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference data for all price data, currency, technical indicators, support, and resistance levels is August 04, 2022. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level that the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.

Note 5:  Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.

Note 6: Dividend Yield may vary as per the stock price movement.

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