After a strong year, many ASX financials stocks stumbled between November and early December.
The S&P/ASX 200 Financials (ASX:XFJ) index dropped almost 9% from November 10 to December 1.
This may have created some buy low opportunities in the sector, and one ASX financials stock that fits the bill is Infratil Ltd (ASX: IFT).
It is down approximately 12% in 2025, which includes a drop of more than 8% since November 12.
The company is engaged in the ownership of an infrastructure business, which provides services to individuals and communities.
The team at Morgans recently initiated coverage on this financials stock. This included an accumulate rating and a healthy upside following the stock price fall in the past month or two.
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Receives investment grade credit rating
The positive report from Morgans came a day after S&P Global Ratings assigned its 'BBB+' long-term and 'A-2' short-term issuer credit ratings to Infratil on December 22.
According to S&P Global, the outlook on the long-term rating is stable.
A report from S&P Global said the rating on Infratil reflects its stable funding, underpinned by substantial permanent capital, and its access to committed bank facilities through many funding relationships.
It did note the company's material single-name concentration risk and the illiquid nature of the asset portfolio partially offset these strengths.
Morgans view on this financials stock
In a note out of the broker last week, Morgans said Infratil is a high quality, concentrated structural growth investor targeting 11-15% per annum post fee returns.
The broker said investors have enjoyed 18% per annum returns over the last 30 years.
Assuming delivery of target returns, post fees the Net Asset Value (NAV) should nearly double over the next five years and create substantial value for equity holders.
Morgans also said the share price is currently trading at a 30% discount to NAV.
Assuming a return to a more normalised 20% discount would lift the share price by ~10% and from there NAV needs to lift for the share price to lift.
Both seem likely, in our view. We initiate coverage with an ACCUMULATE rating and $11.30 target price. This report is the first part of a series that reviews IFT's assets in more detail.
Price target upside
This ASX financials stock closed trading pre-christmas at $10 per share.
Based on the target price of $11.30, this indicates an upside of 13%.
Elsewhere, TradingView has a one year price target of $11.61 which indicates roughly 16% upside.
Online brokerage platform Selfwealth lists this financials stock as undervalued by 17%.
