3 reasons why Legal & General share price could leap 26% to 340p!

Legal & General‘s (LSE:LGEN) share price has surged over the past 12 months, rising 14.3% to 269.1p immediately. With a 7.8% dividend yield thrown in, the FTSE 100 share’s delivered a scrumptious return above 22%.

One very upbeat forecaster believes Legal & General shares will rise 26% in worth over the following 12 months, hitting as a lot as 340p, though many disagree.

I’m optimistic the corporate can preserve offering market-beating dividends. With a strong steadiness sheet, I believe the 8.1% yield for 2026 seems to be fairly safe. However why is that this one analyst so bullish?

Could this FTSE blue-chip actually rise once more? Listed here are three reasons why it’d.

3 price boosters

Maybe probably the most important price driver could be a gentle fall in international rates of interest. This could have a number of giant advantages for the corporate — boosting the amount of cash individuals have to spend on monetary merchandise; reducing Legal & General’s borrowing prices; and elevating the worth of its shares and bonds portfolios.

The share price could additionally rise if it shows robust execution of its strategic objectives. This consists of progress within the asset administration sector, the place it’s searching for to develop scale and margins, and the high-growth pension-risk switch (PRT) market. It’s trying to write between £50bn and £65bn of PRT companies by the top of 2028.

Lastly, the corporate’s shares could obtain a lift on indicators of robust money era and a rising Solvency II capital ratio. The latter fell to 217% as of June from 232% a 12 months earlier, newest financials confirmed. This nonetheless illustrates strong monetary foundations, however an bettering ratio will increase confidence in additional market-busting dividends and share buybacks.

Trying costly

Having mentioned all this, it’s necessary to take into consideration the valuation Legal & General shares at present command. Its price-to-book (P/B) ratio has shot up to 6.4 instances, miles above the long-term common of 2-3. This reveals the enterprise buying and selling at a hefty premium to its steadiness sheet property.

At these ranges, investor curiosity would possibly cool sharply, limiting scope for additional share price beneficial properties. That is why most analysts aren’t as assured because the one predicting a 26% price rise over the following 12 months. Actually, the typical 12-month price goal is 267.3p per share, representing a slight decline from immediately’s ranges.

Are Legal & General shares price contemplating?

So is the FTSE 100 firm a possible purchase? Possibly. As a shareholder myself, I’m not anticipating the share price to take off once more over the following 12 months. However I nonetheless suppose it’s a prime inventory to think about shopping for, particularly for these searching for passive revenue. Annual dividends are anticipated to have risen in 14 of the final 15 years when outcomes for 2025 are launched on 11 March.

And over the long run, I’m anticipating Legal & General shares to rise as an ageing international inhabitants drives monetary companies demand. However I’ve discovered one other FTSE inventory that could carry out even higher.