Morgan Stanley has taken a look at the European insurance stocks and singled out two in the UK with potentially significant upside – almost 45% in one case.
In a wide-ranging note, the American bank said the sector had been a recent underperformer “driven by lower dividend and earnings revisions”.
Reflective of Morgan Stanley’s bullish view, the target price of 1,706p a share is around 30% ahead of its current valuation.
Among the general insurers, Lancashire Holdings (LON:LRE) is significantly undervalued, the bank thinks. Its target price is around 45% ahead of the prevailing stock price.
Also seen as having further to run are Direct Line (LON:DL.) and Phoenix Group Holdings (LON:PHNX).