Challenger Financial (CGF) Stock Recommendation

Challenger Financial (CGF) has a Buy 2 stock recommendation from stock analyst and investment banker UBS with a share price target of $4.60. The company has reduced its stake in CIF to 37.7 percent and will book about $4m gain on the sale of 39.3 million shares in CIF at $3.50 (vs. the market price $3.24). More importantly CGF will now account for distributions from CIF (as a portfolio investor) rather than consolidate earnings (as a majority owner). This drives material earnings upgrades from the stock analyst. The price target and valuation of $4.60 is upgraded from $4.20 to $4.20 and is based on SOTP. The price target upgrade is due to the inclusion of Specialist Funds valuation (20cps) and Asset Mgt b/s growth (20cps) and implies 15.9x diluted 08E.

CGF has recently: (1) sold properties into CDI realising c$429m cash (2) raised US$150m sub debt (3) CIF stake sell-down ($138m cash). Post CDI sell down CGF had ~$1.3bn fixed income (incl cash) investments implying significant excess liquidity in its Asset Mgt portfolio. Recycling of assets and new sources of funding (w/sale annuities, sub debt) will likely enable new investments near term.Material earnings upgrades in 07 (+9.7%) and 08 (+6.5%)

Challenger Financial Services Group Limited is listed on the Australian Stock Exchange (ASX) under stock code CGF. You can view their investor website here. CGF was listed on the ASX on 23 December, 2003. Challenger financial is a multi-faceted financial services organisation, with core businesses in annuities, funds management and administration platforms, financial planning, mortgage financing and margin lending.. A previous Challeneger Financial stock recommendation. Find out the meaning of the recommendations in this primer. Browse for other stockbroker recommendations. Check your charts and good luck with your share trading!