Shares round-up: L&G, Morgan Sindall, ITM Power

High-yielding Legal & General Group (LSE:LGEN) today talked up its “untapped potential” in a session when prolific upgrader Morgan Sindall hit a record price and ITM Power extended its turnaround.

L&G’s “deep dive” presentation on its £1.1 trillion asset management division failed to inspire shares but the enthusiasm of income investors on the ii platform remains undimmed.

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The insurer, which trades with a forecast dividend yield of 8.5%, was among today’s top 10 traded stocks - as it has been for interactive investor customers for most of this month.

At today’s second in a series of three in-depth briefings for City investors, L&G highlighted a target for compound annual growth of 6-10% in asset management operating profit to between £500 million and £600 million in 2028.

L&G is one of Europe’s largest asset managers and a major global investor across public and private markets. The division is a critical driver of the group’s strategy as it works “synergistically” with the company’s Institutional Retirement and Retail divisions.

It said the scale and breadth of its investment expertise and client relationships provided strong foundations for expansion into new channels and geographies. Part of this strategy will see it provide more sophisticated investment solutions.

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L&G said the business is well-positioned for profitable and sustainable growth, adding that it represented a core growth engine with “untapped potential and clear direction”.

By 2028, L&G expects that 70-75% of Asset Management earnings will be fee-related, and that its cost-income ratio will reduce to below 70%.

The profit forecast of £500-600 million compares with UBS’s estimate of £616 million prior to the briefing. The City firm has a Buy recommendation and 275p target price, which compares with this afternoon’s trading level of 253.2p and a post-tariffs low of 215p in early April.

The top stock in the FTSE 350 index was construction business Morgan Sindall Group (LSE:MGNS), which prior to today boasted a record of beating and raising estimates nine times in the past 10 years.

This morning’s significant upgrade to the 2025 profit guidance of just six weeks earlier was driven by strong activity in its Morgan Lovell and Overbury fit-out division.

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In the construction services division, the operating margin is now expected to be in the middle of its medium-term target range of 3-3.5%, while revenues are also ahead of forecast.

Cash generated from the fit out and construction businesses is invested into the company’s housing and mixed-use Partnerships division to create longer-term value for the group and shareholders.

Half-year results on 29 July will provide more detail on the Partnerships performance, but in the meantime broker Peel Hunt has increased its target to 4,800p in order to reflect the momentum and raised guidance.

The shares today rose to a record of 4,445p, having doubled in price since the start of 2024.

The upgrade came as Bank of America initiated coverage on the stock by flagging the significant potential to unlock profits from housing and mixed-use projects. It also highlighted a prudent balance sheet and risk management.

The bank, which had a price target of 4,300p prior to the trading update, said: “Morgan Sindall has enjoyed a net cash position in the past 10 years, and we expect this to continue, providing flexibility to be selective with its pipeline.”

At ITM Power (LSE:ITM), the latest in a series of contract announcements helped the AIM-listed green hydrogen firm to sustain the momentum that has lifted shares by 70% in the past month.

Sheffield-based ITM, which designs and manufactures electrolysers based on proton exchange membrane technology, said today that it had been selected for two UK projects that aim to supply local industries with green hydrogen to reduce carbon emissions.

Chief executive Dennis Schulz said: “This supplier selection demonstrates two things: that the UK is starting to gain traction in green hydrogen, and that we are establishing early leadership in our home market."

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June’s ascent has taken the shares back above their 50p starting price of 2004, when ITM listed as London’s first hydrogen-related stock. They touched 350p as energy security concerns boosted interest in the sector in early 2022, only to fall to 25p in March.

Following two decades focused on R&D and innovation, Sheffield-based ITM is now a high-volume manufacturer that has worked with industrial, energy and transport companies including Shell, Tokyo Gas, RWE and current 16% shareholder Linde.

Schulz has narrowed the portfolio so that the core electrolyser product is capable of mass manufacture, with the same stack technology in projects of any size and region.

The shares accelerated in April after ITM forecast full-year revenues 30% higher than previous guidance and said it expected to be cash generative in the second half of the year.