eyeQ: what to do with Legal & General shares?
Experts at eyeQ have used AI and their own smart machine to analyse macro conditions. Here they consider the FTSE 100 insurer.
26th February 2025 09:59
by Huw Roberts from eyeQ
"Our signals are crafted through macro-valuation, trend analysis, and meticulous back-testing. This combination ensures a comprehensive evaluation of an asset's value, market conditions, and historical performance." eyeQ
- Discover: eyeQ analysis explained | eyeQ: our smart machine in action | Glossary
Legal & General
Macro Relevance: 69%
Model Value: 232.55p
Fair Value Gap: +3.3% premium to model value
Data correct as at 26 February 2025. Please click glossary for explanation of terms. Long-term strategic model.
The past few eyeQ signals – Amazon and the FTSE 250 – have generated ideas for bullish investors looking for dip-buying opportunities. But what about those who are worried that markets are vulnerable to a more meaningful setback? Are there any bearish signals for the tactically cautious?
Legal & General Group (LSE:LGEN) now sits 3.3% rich to overall macro conditions. eyeQ model value is edging higher, but within a well-established range. It’s not making new highs, suggesting that macro momentum continues to move sideways rather than supporting upside in the stock price.
Compare that, for example, with UK banks where model value for Lloyds Banking Group (LSE:LLOY), NatWest Group (LSE:NWG) and Barclays (LSE:BARC) (but not HSBC Holdings (LSE:HSBA)) is trending firmly up.
That means the early February pop higher in the L&G share price hasn’t been accompanied by any improvement in macro fundamentals. And, as such, the stock looks vulnerable if the mood in equity markets turns sour.
For the bears worried about NVIDIA Corp (NASDAQ:NVDA) earnings tonight, for example, L&G looks like an efficient candidate for top-slicing.
Source: eyeQ. Past performance is not a guide to future performance.
Useful terminology:
Model value
Where our smart machine calculates that any stock market index, single stock or exchange-traded fund (ETF) should be priced (the fair value) given the overall macroeconomic environment.
Model (macro) relevance
How confident we are in the model value. The higher the number the better! Above 65% means the macro environment is critical, so any valuation signals carry strong weight. Below 65%, we deem that something other than macro is driving the price.
Fair Value Gap (FVG)
The difference between our model value (fair value) and where the price currently is. A positive Fair Value Gap means the security is above the model value, which we refer to as “rich”. A negative FVG means that it's cheap. The bigger the FVG, the bigger the dislocation and therefore a better entry level for trades.
Long Term model
This model looks at share prices over the last 12 months, captures the company’s relationship with growth, inflation, currency shifts, central bank policy etc and calculates our key results - model value, model relevance, Fair Value Gap.
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