After a challenging period for Challenger, Sep Q total book growth exceeded expectations thanks to Japanese annuity sales and growth in guaranteed income products. Local fixed-term sales are holding up, Macquarie notes, despite low-interest rates.
Unless the cash rate takes a real dive, earnings appear to be stabilising, the broker suggests, and a 13.2x PE is -9% below the stock’s five-year average. Outperform retained, target rises to $8.50 from $8.40.
Sector: Diversified Financials.
Target price is $8.50.Current Price is $7.19. Difference: $1.31 – (brackets indicate current price is over target). If CGF meets the Macquarie target it will return approximately 15% (excluding dividends, fees and charges – negative figures indicate an expected loss).
