Generation Development Group Ltd (ASX: GDG) shares have been strong performers this year.
In fact, as of yesterday's close price, the ASX 200 stock has now doubled in value in 2025.
Despite this, one leading broker believes that it isn't too late to join the party.
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What is the broker saying about this ASX 200 stock?
Bell Potter has been impressed with this financial services company's performance and particularly its "transformative" result in FY 2025.
The good news is that the broker believes it can build on this in the future, particularly given its potential $300 billion opportunity in the superannuation industry. It said:
GDG reported a transformative FY25 result with NPAT up +500% on the pcp to $30.2m, reflecting the full benefit of Lonsec and partial year earnings from Evidentia. Integration advanced well with EBITDA margins being the highlight of the result. Other than that, the heritage business continues to deliver with +26% pa compound growth in funds under management since FY19 to exceed $4.4bn.
Whilst this is a mature and small market, what has changed is the legislative environment. If passed into law, the current proposed tax would levy an additional 15% on earnings from superannuation balances over $3m. This is creating greater product awareness and sales momentum for GDG. We believe that incremental flows from superannuation could be a $300bn opportunity; and see potential for strong results to come.
In addition, Bell Potter highlights that fund management giant BlackRock recently made an investment in the ASX 200 stock, which it feels is a very positive indicator. It adds:
GDG has made significant inroads as a business over the last decade, accelerating in the LTM. The recent $25m minority investment from BlackRock is supportive of our view that commercial success in the retirement or decumulation market could be radical. This is a long-term interest with seed capital locked up for 5-years – set to fund a product launch targeted for the coming year. This is BlackRock's first strategic balance sheet investment in Australia.
Buy recommendation
According to the note, the broker has initiated coverage on Generation Development Group's shares with a buy rating and $8.20 price target.
Based on its current share price of $7.11, this implies potential upside of 15% for investors over the next 12 months.
Commenting on its buy recommendation, the broker said:
We initiate coverage on GDG with a Buy rating and $8.20/sh target. GDG screens well with significant growth runway, trading on a PEG -10% below tech and financial peers.
