RBC Capital Markets has upgraded Standard Life from 'sector perform' to 'outperform' and trimmed its price target modestly from 970p to 950p.
The broker argues that a recent pullback in the shares has created an attractive entry point to what it describes as the strongest earnings growth story in the UK life insurance sector.
Analyst Ben Cohen said Standard Life offers a total capital return yield of around 10.4% in the current financial year, rising to 10.8% in 2027, the highest among UK life peers.
Combined with this is a forecast dividend yield of 6.9% with a £350 million annual share buyback programme, which RBC expects management to confirm at a capital markets day on 30 November.
The broker forecasts operating earnings per share growth of 25% in 2026, 18% in 2027 and 11% in 2028, driven primarily by the Aegon UK acquisition and improving retention of assets at retirement, a trajectory it says is materially ahead of consensus and unmatched across European peers.
RBC made modest cuts to its estimates, trimming EPS forecasts by around 2% across the forecast period to reflect a more cautious assumption for second-half market performance and a small reduction in Workplace margins, but said neither change alters the investment case.
The shares trade at approximately 12 times forecast 2027 operating earnings and offer a free cash flow yield of 13.3%, which RBC said screens as undervalued relative to the quality of the franchise and the growth on offer.
Cohen flagged the 30 November capital markets day as the key near-term catalyst, at which he expects management to set explicit targets for margins, asset retention and capital returns for the next three-year cycle.
Standard Life shares were up 1.9% in morning trade at 848.5p.
