Steadfast shares rise as Morgan Stanley upgrades rating
Make us a preferred source
Make us a preferred source on Google
More news: Steadfast shares were higher by afternoon trade after its internal review found there was no evidence of improper incentives.
Its shares increased 3.83% to $6.10 by 12:47pm AEDT. Over the past 12 months it has risen 7.5%.
E&P analyst Olivier Coulon said he was “unsurprised” by the internal reviews findings and said there was little risk that the negative media reports would lead to a material impact to Steadfast’s cashflows.
“While a cynic might question the relevance of an internal review or even that of an independent review of SDF’s work, we’d suggest SDF’s response to date appears fairly proactive and suggestive of an organisation that is cognisant of the need to operate at a high ethical standard,” Coulon said in a note.
Separately, Morgan Stanley upgraded its rating on the company to ‘overweight’ from ‘equal weight’ and increased its price target by 34 cents to $6.98.
Morgan Stanley said Steadfast was a high quality business with cyclical and structural earnings drivers.
Its overweight thesis was due to:
- Steadfast being a market leader with scale and a one-stop-shop for broking needs;
- Its broker network shores up its acquisition pipeline;
- Increasing global growth options;
- Visionary founder presence; and
- Valuation is in line with or below high growth financial peers.
What they said: “We acknowledge the recent concerns on durability of domestic growth, but think these are overdone and global growth options are opening,” Morgan Stanley said.
“... Trading on ~16.5x FY26E NPATA P/E, SDF is cheaper than many insurers and financials with more limited growth profiles. We think SDF presents compelling value.”
Steadfast says no evidence of improper incentives
The news: Insurance broker Steadfast Group says an ongoing independent review has found no evidence so far of improper incentives or deliberate inactions relating to non-compliance with regulatory obligations.
The numbers: The response comes several months after the national broadcaster ABC alleged that Australia's largest strata insurance broker was "caught misleading its clients".
The context: Steadfast shares have been under pressure since the ABC Four Corners program in September alleged its brokers channelled work to a related entity when cheaper insurance was available.
The company had rejected the claims at the time, and on Tuesday provided an update from the ongoing review by insurance expert John Trowbridge.
What they said: “The internal review has, to date, not found any evidence of channeling of incentives between Steadfast — related entities; or deliberate actions or inactions relating to non — compliance with regulatory or legislative obligations,” the company said.
The sources: ASX announcement, E&P research, Morgan Stanley research
