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Goldman Sachs tips Suncorp shares as a buy

The Suncorp Ltd (ASX: SUN) share price is down 4.5% over the last 12 months, but there could be gains ahead if the analysts at Goldman Sachs are on the money. 

On November 18 the analysts ran the ruler over Suncorp’s trading update provided at a UBS Australia institutional investor conference.

Suncorp did not provide any specific guidance, but Goldman’s is forecasting that it will earn 88 cents per share over FY 2020.

That places it on 14.9x Goldman’s estimate of earnings with a 5.5% yield if Goldman’s estimate for 72 cents per share in dividends over FY 2020 is accurate. 

This looks good value for a business generally regarded as ‘blue chip’, when compared to some of the racy valuations other blue chips like Coles Group Ltd (ASX: COL) or Woolworths Group Ltd (ASX: WOW) are printing. 

However, as Goldman’s points out banks and insurers are facing more regulatory pressure, while earnings can vary wildly depending on claims expenses.

Elsewhere Goldman’s is neutral on QBE Insurance Group Ltd (ASX: QBE) and Insurance Australia Group Ltd (ASX: IAG).

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Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Insurance Australia Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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