Phoenix Group Shares (PHNX) Make New High As Rally Continues

Phoenix Group shares (LON:PHNX) are enjoying a stellar run on the London Stock Exchange, currently trading at 656p, for a 1.22% gain on the day. PHNX hit a new 52 week high of 668p in the process, and caps a month of steady gains, with the Phoenix share price adding 7.16% on the period.

Year-to-date growth of 30% offers solid outperformance on the broader market's 6.77% gain, ably supported by a very healthy dividend, and analyst support.

The recent surge started with the latest financials and dividend, and has continued, in part, with upgrades from Deutsche Bank on May 21st, 2025. The bank elevated Phoenix Group to a ‘buy' rating, simultaneously boosting its price target by a substantial 36% to 730p.

Deutsche Bank's rationale centered on the company's enhanced balance sheet flexibility, improved cash generation capabilities, and, crucially, a strategic evolution towards a more comprehensive presence in retirement savings solutions. The bank specifically highlighted the growth of Phoenix Group's bulk annuity franchise and its increasing focus on workplace pensions as key drivers of this transformation.

Perhaps most enticing for investors, Deutsche Bank pointed to a well-covered 9% dividend yield and projected free cash flow yields rising to a compelling 19% by 2027.

Phoenix Group's commitment to returning value to shareholders, underscored by its dividend has also helped support bullish sentiment. Back in late March, the company declared a dividend of 27.35p, an increase from the previous dividend of 26.65p. This announcement coincided with the stock reaching a new 52-week high at the time, before the April tariff pullback came and reversed fortunes for a time.

The current average price target on the street of 657.85p is now marginally below price action, with a clear split between the bulls and bears. The range of 542p to 850p highlights some of the disparity, with the key differences below.

Bull Case

• Strong Dividend Yield: Attractive and well-covered dividend yield provides income and downside protection.
• Strategic Transformation: Shift towards a broader role in retirement savings and growth in bulk annuities drive long-term growth.
• Analyst Upgrades: Positive sentiment from Deutsche Bank and others signals market confidence.
• CEO Confidence: Significant share purchase by the CEO demonstrates faith in the company's future.
• Revenue Growth: Impressive revenue growth in FY24 highlights the company's potential.

Bear Case

• High Valuation: Elevated P/E ratio suggests the stock may be overvalued.
• Market Sensitivity: Financial services sector is susceptible to economic downturns and market fluctuations.
• JPMorgan's ‘Underweight' Rating: Contrasting opinion from JPMorgan suggests caution despite positive developments.
• Execution Risk: Success depends on the company's ability to execute its strategic vision and manage costs effectively.

With Phoenix continuing to outperform the FTSE 100 over the past 12 months, and returning to levels not seen in 3 years, we have to look back at an extended 5year chart to find clues as to which levels may act as support or resistance. 680p had previously provided resistance in 2022, and support previously in 2021. Bulls will no doubt be keeping an eye on the level as one to watch.