Goldman, UBS cut L&G as credit leverage and pension risks weigh

Legal & General Group's shares experienced a 3% decline on Tuesday following downgrades from Goldman Sachs and UBS. Citi Research joined the trend, also reducing its rating to "sell." Citi cited a decrease in 2026-27 remittance forecasts by 4.5%, attributed to lower pension buyout volumes underwritten at a reduced IFRS margin. This led to a 15.4% negative total return, accounting for a 22.5% share-price decline and a 7.1% dividend yield.

Goldman Sachs lowered its target price to £2.45, indicating a 17.4% downside from L&G's 311.2 pence closing price. The firm raised its 2026 core operating EPS estimate by 2%, driven by higher Asset Management earnings, but cut its 2027-2030 estimates by about 3% on average due to increased Institutional Retirement asset optimisation and higher costs.

UBS also reduced its target price to 280 pence from 260 pence, projecting a 12% downside from the 316 pence closing price on August 7. The downgrade was driven by a falling UK bulk purchase annuity margin and lower expected EPS growth in the Institutional Retirement business.