Legal & General Group PLC 

Legal & General Group PLC (LON: LGEN) is an FTSE 100 index listed entity that is involved in products and services related to insurance and investment management. 

Investment Rationale – SELL at GBX 284.00 

• Profit Booking: LGEN’s stock price has breached the resistance 1 level suggested in the report on 26 July 2022; and thus, it is presenting a profit booking opportunity.  
• Interim Results: In H1 FY22, Legal & General Group has delivered an 8% YoY growth in operating profit. However, return on equity was reduced to 21.3% (H1 2021: 22.0%).  

• Technical Standpoint: LGEN’s stock price has breached the upper Bollinger Band, while its 14-day RSI (~73.22) is confirming the overbought zone.  
• Macroeconomic Uncertainties: LGEN is susceptible to four-decade high inflation, volatility of investment performance, monetary and fiscal policy influence, threat of new entrants, among others. Moreover, the Bank of England (BoE) has increased the interest rates by an aggressive 50 basis points to 1.75%.  BoE has also given warning for recession this year. 

Share Price Chart   

(Source: Refinitiv, Analysis done by Kalkine Group) 

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

Conclusion 

Based on the decent notional gains, macroeconomic challenges, coupled with the unfavorable valuation conducted above, a "SELL" recommendation on Legal & General Group PLC has been given at the current market price of GBX 284.00 (as of 11 August 2022, at 8:50 AM GMT+1). 

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

Note 2:The reference date for all price data, currency, technical indicators, support, and resistance level is 11 August 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 which 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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