Credit Suisse sees possibility for Challenger to announce a joint venture with Apollo, likely focused on the domestic direct lending market, and predicts the market could sustain a $14-18m contribution to Challenger from the partnership, based on a equal split joint venture.
With the company set to update investors next week, the broker anticipates positive news noting credit spreads and higher interest rates should benefit Challenger. Credit Suisse lifts earnings per share forecasts 4% and 7% for FY23 and FY24.
The Neutral rating is retained and the target price increases to $7.60 from $7.00.
Sector: Diversified Financials.
Target price is $7.60.Current Price is $7.47. Difference: $0.13 – (brackets indicate current price is over target). If CGF meets the Credit Suisse target it will return approximately 2% (excluding dividends, fees and charges – negative figures indicate an expected loss).