18th Apr 2024 10:33
(Alliance News) - Panmure Gordon thinks AJ Bell is simply "too cheap" for the growth that is delivering, after the company reported "record" assets under management and a jump in customer numbers.
On Thursday, the Manchester, England-based retail investment platform operator reported an increase in customer numbers on its platform in its financial second quarter, which ended March 31, to 503,000, an increase of 19,000 during the period.
The AJ Bell platform had "record" assets under administration of GBP80.3 billion, a rise of 17% on-year and 5% on-quarter.
"Gross and net inflows across the platform in the run-up to the tax-year-end were significantly higher than in the comparative quarter last year," AJ Bell added.
Gross inflows rose 36% annually to GBP3.4 billion. Net inflows were up a third to GBP1.6 billion.
Chief Executive Officer Michael Summersgill said: "We saw strong momentum in the run up to the tax year end as improving retail investor sentiment, together with continued investment in our brand and propositions, helped to deliver GBP1.4 billion of gross inflows in March alone, a new monthly record for the business."
Assets under management at AJ Bell Investments were GBP5.8 billion as at March 31, up 49% from GBP3.9 billion a year prior and 12% higher than GBP5.2 billion on December 31.
AJ Bell shares were 6.1% to 315.50 pence each on Thursday morning in London.
AJ Bell shares are up 5.7% year-to-date, but down 4.2% in the last 12 months. Towards the back end of last year, shares in investment platforms suffered after the UK Financial Conduct Authority set out concerns on the treatment of retained interest on customer cash balances.
The FCA said it was concerned some practices may not be providing fair value to customers and "may not be understood by consumers or properly disclosed".
Panmure Gordon noted AJ Bell has seen strong inflows in the period with growing momentum into the tax year-end.
Net inflows of GBP1.6 billion in the quarter were "comfortably ahead" of the broker's estimates reflecting continued growth in customer numbers on both Advised and direct to customer platforms as well as increased savings by existing customers.
Panmure Gordon said the group continues to address its "value proposition" for customers, the impact of which the broker believes is already in guidance, reinforcing its competitive positioning and underpinning expectations for continued future growth.
The broker reiterated a 'buy' rating, with a 488p share price target, and feels the stock is "simply too cheap for the growth delivered."
AJ Bell is proving that it "can grow faster than the market," the broker said.
"A premium rating is wholly deserved but currently absent," it added.
By Jeremy Cutler, Alliance News reporter
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