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Highlights

  • Bell Potter and Macquarie both maintain a BUY/OUTPERFORM stance on Challenger Ltd (ASX:CGF).

  • Analysts project a price target of up to AUD 9.35, representing an upside of 15.29% from the current share price.

  • CGF's growth outlook supported by double-digit earnings growth and expanding superannuation sector.

Challenger Ltd (ASX:CGF), Australia’s leading life annuities and retirement income provider, has received renewed BUY ratings from major financial institutions, with analysts projecting significant upside in the stock price. Bell Potter Securities and Macquarie Research remain confident in Challenger’s growth outlook, driven by structural tailwinds in the retirement and superannuation sectors.

Bell Potter Securities (Institutional) has reiterated a BUY recommendation on CGF with a price target of AUD 7.80, implying a modest downside of 3.82% from the current share price of AUD 8.00. However, Macquarie Research maintains an OUTPERFORM rating with a much higher target of AUD 9.30—representing a potential upside of 14.67%. The highest target came from another analyst at AUD 9.35, equating to a 15.29% gain.

These buy recommendations come as CGF’s long-term growth rate is projected at 9.8%.

Financial Performance

The company reported a FY24 Normalised NPAT (Net Profit After Tax) of AUD 417 million and expects to deliver between AUD 450–465 million in FY25, representing a midpoint increase of approximately 10%.

Normalised return on equity (ROE) rose to 10.7% in FY24, and is trending even higher at 11.6% in 1H25. Additionally, Challenger has grown its earnings per share (EPS), which reached 60.9 cents in FY24, compared to 53.3 cents in FY23. The dividend per share has also increased steadily, hitting 27.5 cents in 1H25 with a payout ratio stabilising near the 44–45% range.

This combination of earnings momentum, capital returns, and dividend stability supports the analysts’ confidence in the company’s near-term and long-term valuation.

Retirement Sector Driving Future Growth

Challenger is strategically positioned to benefit from Australia’s ageing population and booming superannuation market. By 2030, over 7.1 million Australians will be aged 60 or older, with 2.5 million expected to retire in the next decade. Life expectancy in Australia stands at 83.2 years—among the highest globally—underscoring the rising demand for secure retirement income products.

The projected growth in Australia’s superannuation assets—from AUD 4.2 trillion in 2024 to over AUD 11 trillion by 2043—presents a compelling market opportunity. Average super balances are also rising significantly, with 2024 estimates at AUD 244,000 compared to AUD 57,000 in 2004.

Challenger is capitalising on this growth through diversified retirement income solutions that convert lump sums into lifetime income, a model aligning with the regulatory and government objectives.