M&G, Legal & General Shares Slide After UBS Downgrades to Sell

M&G (LON: MNG) and Legal & General (LON: LGEN) shares fell on Tuesday after UBS downgraded both British financial services firms to “sell” from “neutral,” adding to a broader wave of bearish analyst sentiment across the UK insurance and asset management sector.

M&G shares dropped roughly 3.5% to around 349.6p, off Monday’s close of 362.4p, even as UBS lifted its price target on the stock to 330p from 300p. Legal & General shares fell about 3.1% to 301.6p from a previous close of 311.2p. UBS also raised its target for L&G to 280p from 260p, implying roughly 12% downside from the shares’ 316p close the previous Friday.

The downgrades came alongside similar moves from rivals. Goldman Sachs also cut Legal & General to “sell” from “neutral” on Tuesday, with an unchanged 257p target implying about 17% downside, while Citi Research had already downgraded L&G to “sell” a day earlier, trimming its 2026-27 remittance forecasts by 4.5% following the insurer’s half-year results.

UBS flagged that Legal & General’s UK bulk purchase annuity margin fell to 4.2% in the first half of 2026, down sharply from 7.1% a year earlier, citing intensifying competition and pricing pressure.

The bank also expects management to fall short of its 2023-28 earnings growth target for the Institutional Retirement business, forecasting 4.5% growth versus a 5-7% goal. UBS further noted L&G’s dividend “remains uncovered” in the near term and that shares are trading at the top of its sum-of-the-parts valuation range.

Goldman separately warned that L&G carries “sector-leading credit leverage,” creating risk if corporate bond spreads widen, even as the shares have outperformed European insurance peers by roughly 14 percentage points year-to-date.