Will Standard Life Aberdeen shares fly under Stephen Bird’s wing?

Will the recent Standard Life Abedeen share price gains continue? Changes at the top suggest a positive outlook but it may be a long-term deal.

The Standard Life Aberdeen (SLA) share price chart has shown more peaks than troughs in recent weeks. However, changes at the top could cause the positive run to end. For those tracking the Scottish investment company’s share price over the last four weeks, prices have been bullish. Following a five-year low in March (189p), shares have gradually recovered.

When the markets closed on 17 July, the Standard Life share price was 264p. For short-term investors that jumped on board in March, times are good right now. The omens took on yet more positives at the start of July, when chief executive of the fund Keith Skeoch announced he was stepping down.

Could management change signal a new era for Standard Life?

Former Citigroup banker Stephen Bird will take the helm before the end of September, a move that has been hailed as a positive. Bird is no stranger to guiding businesses through times of change. During his time at Citigroup, he oversaw a number of mergers and acquisitions. With Standard Life still reeling from a less-than-smooth merger with Aberdeen Asset Management, a change at the top undoubtedly signals a new era.

Not only will Bird have the power to right previous wrongs and create new business, but his presence will also draw a line under the merger orchestrated by Skeoch. In essence, investors are currently seeing the incoming of Bird as an outgoing of the old regime and, thus, many of its previous problems. Indeed, as a fund, SLA has returned less than 5% over the last year. The returns drop even lower over a five-year timeframe with the stock underperforming the FTSE 100 by more than 8% per annum.

Are Standard Life shares set to soar?

Will SLA shares soar under the wing for Bird? This is a matter for debate. His appointment will almost certainly give the SLA share price a lift. In fact, we are already seeing the positive effects of the news. However, there is a strong likelihood that the early part of his tenure could cause another dip. With the company’s dividend yield not currently covered by underlying earnings, a cut is likely. Expectations are that the rate of 8% could be reduced to somewhere within the 4% range.

That is certainly not a poor yield given the current climate. However, a drop of any sort is bound to have a negative impact on the SLA share price for at least a short amount of time. The other issue Bird will look to address is the company’s main assessment management business. The market has become increasingly competitive over the last five years due to cheaper passive funds. Generating new business in this area will be tough.

Highs may only come after lows

Teething troubles with the asset management business could give the new chief executive problems in the short-term. This, in tandem with a cut to dividend yields, points to a period of turbulence for the SLA share price. The recent gains are a sign that, overall, investor sentiment is optimistic. However, there are those who are cautious that a turnaround might not happen quickly, if at all. Many are, therefore, hedging their bets on the SLA share price.

Assuming Bird can put his previous experience to good use, the long-term outlook is positive. However, those with faith in Bird may have to endure some turbulence. A long-term buy rating is certainly on the cards for SLA shares, but on the proviso that a period of change could cause prices to take a dive. The current assumption is that a short-term drop will be for the greater good. However, anyone looking to invest has to accept that too much of a dip may leave SLA grounded indefinitely.

How to trade stocks with IG

Looking to trade the Standard Life Aberdeen and other stocks? Open a live or demo account with IG and buy (long) or sell (short) shares using derivatives like CFDs and spread bets in a few easy steps:

  1. Create an IG trading account or log in to your existing account
  2. Enter ‘Standard Life PLC’ in the search bar and select it
  3. Choose your position size
  4. Click on ‘buy’ or ‘sell’ in the deal ticket
  5. Confirm the trade

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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