CGF – Deutsche Bank rates the stock as Buy

Deutsche Bank analysts argue it is not really appropriate taking action and drawing conclusions on the basis of one quarterly update if the underlying character of Challenger’s headwinds in Funds Management and Mortgage Management is long term. Close to 80% of group EBIT (earnings before interest and taxes) comes from Asset Management, the analysts point out. The analysts would not be surprised to see both funds outflow to slow from here but also to see Challenger lose more mandates over the months ahead. Buy retained because of the reasons given in the first two paragraphs. Sector: Diversified Financials.

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CGF – ABN Amro rates the stock as Upgrade to Buy

It was a solid result, the broker suggests, featuring impressive margins and good cost control. Challenger financial has enough capital in the tin to withstand further write-downs. A rise in the tax rate offsets increases in forecast earnings, but with the shares now trading at only 3x FY09 earnings the broker has upgraded to Buy. Target rises from $1.09 to $1.67. Sector: Diversified Financials.

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CGF – Deutsche Bank rates the stock as Hold

Forget about the operational results, Deutsche Bank analysts believe it’s all about balance sheet and Challenger’s has become worringly tight. As the company may yet be able to avoid a capital raising the recommendation has not been pulled back to Sell, but it has been pulled back nevertheless. Price target has nearly halved to $0.45 from $0.81. The stock is expected to trade at a discount to valuation until its balance sheet metrics improve. Sector: Diversified Financials.

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