Standard Life share price: what to expect from 2018 results

Asset manager Standard Life Aberdeen faces tough times, as it fights to halt outflows while battling the desire for lower costs among investors. Added to that, the technical outlook seems grim indeed.

Standard Life Abeerdeen Source: Bloomberg

When is Standard Life Aberdeen’s earnings date?

Standard Life Aberdeen (SLA) is expected to report full-year earnings on 13 March.

Standard Life Aberdeen’s results preview: What does the City expect?

SLA is expected to report earnings per share of 18.5p, while revenue is forecast to be £1.88 billion. The firm continued to see outflows at its first half (H1) results, when assets under management (AUM) fell by £16.6 billion to £557 billion, although adjusted pre-tax profit rose 32% while the dividend was boosted by 4.3% to 7.3p per share.

The firm has taken the decision to focus on the asset management side of the business, selling off the insurance arm to Phoenix. But this looks to be a mistake in the short term, given how outflows look set to continue. Nonetheless, it has managed to increase cost savings to £350 million, indicating that the merger is proceeding in a satisfactory manner.

Certainly, the tougher outlook for the firm has been reflected in its valuation. The shares now trade at around ten times earnings, highlighting how cautious the market is on the outlook. The dividend yield has now touched 9.5%, which is above the 8% level that normally signals an excessively high payout that is at risk of a cut.

Asset managers face a host of problems, not least the war on costs being waged thanks to the rise of exchange traded funds (ETFs), and the push to make the financial services industry more transparent.

How to trade Standard Life Aberdeen’s third-quarter results

The average one day move on results day for SLA has been 4.8%, according to data from Bloomberg, but at present implied options pricing suggests a move of 7.2%. Thus, traders should be prepared for a significant uptick in volatility around the numbers.

It is worth noting that, of 18 brokers currently covering the shares, 12 have a ‘buy’ rating, and six have a ‘sell’ rating on the company. The overall target price is 324p, nearly a third higher from the current price of 250.8p.

How has Standard Life Aberdeen’s share price been performing?

SLA shares have steadily lost ground over the past year, falling from a high of 418.5p the current level around 245p. The shares managed to rally from the December low by around a quarter, but then resumed their decline.

The shares have solidly underperformed the FTSE 100, and so far there seems little hope of a sustained turnaround.

Standard Life Aberdeen share price: technical analysis

While equity markets as a whole might have bottomed out and look to push higher, the same cannot be said of poor SLA. The downtrend has been steady and unrelenting, with a sequence of lower highs and lower lows, although there might be the faintest glimmer of hope that the February low of 230p might be a higher low and a sign of improvement.

Crucially, the December 2018-January 2019 ran out of steam at 270p, just below the highs of October and November 2018. While the pullback found support around 230p, it has since run out steam just above 250p, and a downturn from there raises the uncomfortable prospect of a push back below 230p and down to the December nadir at 221p.

SLA chart

SLA chart

Conclusion

The merger of Standard Life and Aberdeen to create SLA was designed to ensure the combined firms would weather the storm. But the tough times are not over and so far the share price has yet to rebound. Indeed, from the looks of it, more declines are likely, with no sign of a catalyst to revive the firm. Even though it trades at a cheap valuation, the problems facing the firm mean it justifies the current cautious outlook.


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