On Tuesday, RBC Capital Markets adjusted its stance on XPS Pensions Group Plc (XPS:LN) shares, increasing the price target to £3.15 from the previous £2.70. The firm has reiterated its Outperform rating for the pension consulting company's stock.
The upward revision in the price target comes as RBC Capital recognizes the growing interest in the 'run-on' endgame strategy among UK defined benefit (DB) pension schemes, which is seen as a positive development for XPS Pensions. According to RBC Capital, this trend is expected to boost the company's earnings per share (EPS) for the fiscal years 2025 and 2026 by 3% each year.
The analyst from RBC Capital highlighted the importance of engaging clients in discussions about the changing landscape of DB pension schemes and the complex advice required for those opting to run on. This scenario is anticipated to contribute to an increase in earnings for XPS Pensions, warranting a higher price target.
The new price target reflects an enhanced valuation multiple and raised earnings expectations. The analyst's statement comes as the market anticipates the release of XPS Pensions' fiscal year 2024 results on June 20, 2023. Ahead of these results, the Outperform rating has been reaffirmed, signaling confidence in the firm's performance.
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