SDF – UBS rates the stock as Initiation of coverage with Buy

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Premium growth on the client trading platform has been tracking behind target but increased broker uptake of the INSIGHT platform, along with the expansion of auto-rating to additional classes, is expected to clear bottlenecks to growth from the second half of FY21.

Hence, UBS suggests the target of 60% of contestable gross written premium on the platform is still achievable, albeit likely beyond FY24. The monetisation will be brought forward under a revised professional services fees agreement with insurers.

The broker envisages around 10% growth in earnings per share over FY20-23 and initiates coverage with a Buy rating and $3.90 target.

Sector: Insurance.

Target price is $3.90.Current Price is $3.35. Difference: $0.55 – (brackets indicate current price is over target). If SDF meets the UBS target it will return approximately 14% (excluding dividends, fees and charges – negative figures indicate an expected loss).

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