Deutsche Bank keeps Legal & General at 'buy' on potential CALA sale

29th May 2024 10:28

(Sharecast News) - Deutsche Bank has reiterated its 'buy' call for financial services and asset management company Legal & General following news of a potential sale of Cala Homes.

It was reported on Tuesday that Persimmon was weighing up a £1bn bid for Cala, the housebuilder that Legal & General took full ownership of in 2018. It is thought that other competitors in the sector will likely consider bid ahead of a deadline at the end of this week.

"A potential sale would not be a surprise given we expect L&G's CEO to talk about streamlining the group with the capital markets day on June 10th," said Deutsche Bank in a research note on Wednesday.

"Overall, we see this as a positive, as it should provide optionality for growth and/or one-off capital return. As such, ahead of the CMD, we reiterate our positive thesis on L&G, which is a top UK insurance pick."

The bank noted that Legal & General's shares trade on an "attractive" dividend yield of 9% on 2025 estimates.

Deutsche Bank has a 300p target price for the stock, which was down 1.5% at 249.1p by 1244 BST.