Legal and General Share Price Outlook: Buy the Dip?

The Legal and General share price has dropped to the lowest level since March 9th. It has dropped by more than 10% from its highest level since April 21st bringing its market cap to over 14.5 billion pounds. The stock has moved above 12% from the lowest level in March this year. 

Legal and General is a leading insurance and investment company that operates mainly in the United Kingdom. The firm operates a variety of business divisions that include capital management, investment management, retirement solutions, retail insurance, and general reinsurance. Its investment division has over 479 billion assets under management. This makes it the second-biggest asset manager in the UK after Blackrock.

The company generates most of its income from its LGRI division of these divisions. For example, in 2021, the division delivered an operating profit of over 1.1 billion pounds. It was followed by LGIM, which had an operating profit of over 422 million pounds, and LGRR, which had a profit of over 352 million pounds. 

The company’s strategy is different from that of Aviva, which has decided to shrink its size and focus mostly on its lucrative UK life insurance division. The only difference was that the company decided to combine its retail and business division in order to create a platform with over 600 million pounds in profits. The firm has over 12 million retail investors and 4.4 million workplace pension holders.

With interest rates rising, there is a likelihood that Legal and General will do well. Another catalyst is that the company has attractive dividends that are covered well.

The daily chart shows that the LGEN share price has been in a strong bearish trend in the past few months. The shares have moved below the important support level at 253p, which was the lowest level on April 7th. It is also approaching the key support level at 232p, which was the lowest level on July 21st.

At the same time, the Smart Money Index (SMI) has fallen to the lowest level in more than a year. The same is true with the accumulation and distribution indicator. Therefore, there is a likelihood that the Legal and General share price will keep falling as bears target the support at 230p. In the long-term, however, the shares will likely bounce back.

Legal and General