Legal & General share price and full-year earnings results preview

When are Legal & General’s results expected?

Legal & General, the British multinational financial services and asset management company, is set to release its full-year (FY) 2022 results on 8 March 2023. The results are for the year ended 31 December 2022.

What is ‘The Street’s’ expectation for the FY results?

‘The Street’ expectations for the upcoming results are as follows:

Revenue of £11,62 billion : +12% year-on-year (YoY)
Earnings per share (EPS): 34,14 pence : +4.82 (YoY)

The financial services provider, with a pension annuities business, an investment management division, and an insurance services arm, is the UK’s biggest investment manager for corporate pension schemes, a market leader in pension risk transfer and a major global investor, with £1.3 trillion in global assets under management.

Just like its peers it is benefitting from higher and still increasing interest rates in the UK while the economy remains robust as shown by Tuesday’s stronger-than-expected retail sales and housing price data.

With the Legal & General Group largely being controlled by institutional shareholders who own 80% of the company - 47% of the business being held by the top 25 shareholders – their full-year results out on Wednesday will be under great scrutiny.

It is understood that the company’s debt is not well covered by operating cash flow and that profit margins may be lower than last year but earnings are nonetheless expected to grow by around 8% compared to last year and by 6.5% on average per year for the next three years with a healthy dividend of above 7%.

Analysts will dissect the company’s expected operating profit of £2.45 billion – compared to £2.26 billion in 2021 - to see whether its rapidly growing retirement institutional business can offset pressures in its investment management division, which was impacted by last year’s market upheaval, and its alternative asset platform.

How to trade Legal & General into the results

Refinitiv data shows a consensus analyst rating of just about a ‘buy’ for Legal & General – 1 strong buy, 8 buy and 8 hold - with the median of estimates suggesting a long-term price target of 297.50 pence for the share, roughly 11% higher than the current price (as of 7 March 2023).

IG sentiment data shows that 92% of clients with open positions on the share (as of 7 March 2023) expect the price to rise over the near term, while 8% of clients expect the price to fall. Trading activity over this week showed 69% of sells and this month 64% of sells.

Legal & General – technical view

Legal & General’s share price is trading at levels last seen in September 2022, up around 6.5% year-to-date, and is in the process of trying to break through its 2022-to-2023 downtrend line at 267p.

If successful, meaning if a weekly (Friday) chart close above the downtrend line were to be made, the August peak at 287.9p would be in focus.

Legal & General Weekly Chart

The medium-term bullish view will remain intact while the December low at 244.1p isn’t being slipped through.
It made up the lowest point of the share’s November-to-March sideways trading range which it this week has broken out of to the upside.

Towards the middle of this sideways trading range the 55-day simple moving average (SMA) can be spotted at 256.1p.

Legal & General Daily Chart

Provided that the next lower February lows and the 200-day simple moving average (SMA) at 251.1p to 250.3p underpin on a daily chart closing basis, the short-term trend will remain bullish.

Only a currently unexpected bearish reversal and fall through the December trough at 243.4p would negate the bullish medium-term trend.

Summary

Legal & General is set to release FY 2022 results on 8 March 2023.

FY 2023 results are expected to show revenue of £11,62 billion (+12% YoY) and EPS of 34,14 pence (+4.82% YoY).

Revenue is expected to be boosted by Legal & General’s rapidly growing retirement institutional business while pressures in its investment management division and its alternative asset platform may reduce it.

Long-term broker consensus suggests the share to currently be a weak ‘buy’, with a median price target of 297.5p for the share, roughly 11% higher than the current price.

92% of IG’s clients with open positions are long the share but trading activity this week and month shows 69% and 64% of sells respectively.

The Legal & General share price is trading at levels last seen in September 2022 and is in the process of trying to break through its 2022-to-2023 downtrend line at 267p whilst targeting the August peak at 287.9p.

While the December trough at 243.4p underpins, the bullish medium-term trend remains intact.