Generation Development Group shares rise as Morgan Stanley initiates 'overweight' rating
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The news: Shares in Generation Development Group lifted on the ASX as Morgan Stanley initiated coverage of the investment company with an 'overweight' rating.
The numbers: GDG shares were up 0.8% to $3.83 by 11:50am AEDT, having more than doubled in value since January. The financial sector was flat while the wider sharemarket fell 0.4%.
Morgan Stanley set a price target of $4.75 on the stock, with 23% upside potential.
The context: Morgan Stanley analysts said GDG outperformed the ASX small cap index over the last year, driven by net inflow momentum and becoming 100% owner of investment services provider Lonsec in June.
The company is now well positioned for inclusion in the ASX 300 in March 2025, they said.
The analysts also believe GDG could be the next Hub24, delivering a similar long growth runway as the ASX-listed investment platform.
What they said: "The [Hub24] experience has shown that AU wealth-exposed businesses with industry leading value propositions, operating in structural growth segments can deliver high earnings growth for long periods of time, driving excellent shareholder returns," the analysts said.
"We see many similarities between GDG and [Hub24], only we think GDG is earlier in their lifecycle, and should deliver higher growth/returns over the medium term."
The source: Morgan Stanley research
