Legal & General Shares Rise, Analyst Caution Flags Wave

Legal & General (LGEN.L) shares are up around 1.1% today, extending their year-to-date gain to more than 13%.

However, a chorus of recent analyst downgrades and price target revisions suggests a growing sense of caution surrounding the financial services giant.

On Wednesday, JPMorgan downgraded Legal & General to Neutral from Overweight, setting a price target of 275p on the stock, a decrease from their previous 290p. The firm cited limited potential for further upside in consensus estimates and valuation concerns as the primary drivers behind the downgrade.

Meanwhile, on Tuesday, RBC Capital also expressed bearish sentiment, lowering its price target on Legal & General to 200p from 220p and maintaining an Underperform rating on the shares.

The move follows an earlier downgrade from Sector Perform to Underperform by RBC Capital, which occurred over a week ago, with analysts highlighting potential challenges to the company's margins and volume amid intensifying competitive pressures and softening demand.

While Morgan Stanley offered a slightly more optimistic perspective last Friday, raising their price target to 250p from 237p, the firm maintained an Equal Weight rating on the stock.

In July, Goldman Sachs downgraded LGEN to Neutral from Buy. They maintained a price target of 249p on the company's shares, citing reset capital return expectations and the potential for increased competition in the UK bulk annuity space due to new market entrants.

Finally, Deutsche Bank cut its rating on LGEN to Hold from Buy in June, while HSBC also cut the stock to Hold from Buy in May.