Jefferies raises Phoenix worth goal 120%

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US funding financial institution Jefferies has raised the worth goal for the share worth of Israeli monetary companies group Phoenix Monetary (TASE: PHOE) by a whopping 120% from NIS 68 to NIS 150, whereas preserving a “Purchase” suggestion for the corporate’s share. The share worth is up 0.68% in late afternoon buying and selling.

The brand new worth goal displays a 27.3% premium on Phoenix’s present market worth. The earlier worth goal was issued in January and since then the share worth has risen sharply and surpassed it. Jefferies SVP insurance coverage fairness analysis Philip Kett famous that the share worth is up 123% for the reason that begin of 2025 and up 686% over the previous 5 years. He additionally factors out, “Income have greater than quadrupled since 2020, whereas capital returns are rising quickly.”

He continues, “That is actually the biggest worth goal transfer that we have now ever undertaken. (It’s unclear if he means for all shares lined by Jefferies or simply insurance coverage and monetary shares). However the transfer is supported by two fundamental components. The primary is the introduction of IFRS 17 (An accounting normal designed to enhance transparency and assist buyers higher perceive the construction of earnings).

Jefferies can be updating its forecasts for Phoenix’s outcomes, as a consequence of what it defines as the corporate’s “outstanding elementary outperformance,” and is elevating its earnings per share forecast by about 70%. The funding financial institution estimates that internet earnings per share will attain NIS 12.5 in 2026, up from NIS 11.07 anticipated this 12 months and NIS 9.51 reported in 2024.

The second issue that led to elevating the worth goal, in line with Kett, is the discount within the danger premium, “pushed by nation and market components.” He writes, “In truth, the share worth is already within the strategy of reflecting this, with the shares up +123% year-to-date, +208% over a 12 months, and +686% over 5 years. Maybe most significantly although, we’d emphasize that such a fabric share worth motion represents solely a modest re-rating, with the 1-year ahead P/E transferring from c.7x this time final 12 months, to c.9x in the beginning of 2025, and nonetheless lower than 10 immediately.”

He provides, “We’d level to world friends which have equally re-rated. For instance, within the case of Allianz, our most up-to-date evaluation of consensus expectations reveals that regardless of earnings forecasts remaining basically unchanged, the shares have re-rated materially, with the 1-year ahead P/E rising from lower than 10 a 12 months in the past to 11x immediately.

Jefferies outlook contains some primary assumptions together with that “Israel has structurally engaging demographic and financial tailwinds, supported by excessive requirements of insurance coverage regulation and governance,” and “Engaging tracks for progress in revenue based mostly on the aggressive plan not too long ago offered by the corporate.”