Generation Development Group Limited (ASX: GDG) is an ASX financials stock that has flown almost 90% higher in the last year.
For context, the S&P/ASX 200 Financials Index (ASX:XFJ) is up roughly 9% in the same span.
The company provides investment bonds and investment-linked lifetime annuities which offer innovative and tax-efficient solutions for wealth accumulation, estate planning and generating regular income in retirement.
The team at Bell Potter released a new report on this ASX financials stock yesterday.
The broker reiterated its buy rating, tipping more than 27% upside from its current price.
Here's what the broker had to say.
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Long term targets and acquisitions
Bell Potter said it recently attended Generation Development Group's Investor Day. According to the broker, FY28 targets and new revenue streams were flagged.
The broker said Generation Development Group has provided a blueprint for Evidentia Group which was acquired for $320 million back in February.
Generation Development Group said it is targeting net inflows of $28-33bn (the current print is an $8bn run-rate), funds under management (FUM) around $65-75bn (consensus is $64bn) and +50% EBITDA margins, which would equate to about $80m at EBITDA line.
Based on FY28, Generation Development Group would be trading ~1x PEG using this metric alone.
Bell Potter also noted that Generation Development Group flagged an intention to double its business consulting capacity and announced the acquisition of Encore Advisory Group.
New revenue
Bell Potter sees upside in Generation Development Group's new revenue opportunities, which appear stronger than previously expected, particularly from expanding business lines beyond the core operations.
Key catalysts include:
- BlackRock's 6–9 month RFP process with major superannuation funds (potential large client win).
- UK pilot launch for Generation Development Group 's SuperRatings business.
- Development of early lifecycle ratings to tap into the managed fund research market.
- Expansion of governance services via subscription-based offerings.
Price target upside from Bell Potter
Bell Potter retains its buy recommendation on this ASX financials stock.
The broker has a price target of $8.40 on Generation Development Group shares.
This indicates an upside of 27.66% from its current share price.
We make no changes to forecasts and came away impressed with the executive team. The FY28 target for $1bn lifetime annuities looks to be ambitious but neither this nor potential catalysts are priced in. We reiterate our $8.40ps target price with the recent weakness, high earnings visibility (+30% compound growth) and upside on the table.
