19th Jul 2023 09:13
(Alliance News) - Hargreaves Lansdown PLC will need more than "modest" fourth-quarter results to change investor sentiment towards the stock, an analyst at Edison said on Wednesday, though a slow recovery may be as good as it gets.
Shares in the company climbed 5.2% to 883.50 pence in London on Wednesday morning, and are up 6.3% from 12 months earlier. Longer-term, the stock is nursing a heavy fall, Edison's Neil Shah noted. They are down 55% since the start of 2019.
The investment manager said net new business increased 6.3% quarter-on-quarter to GBP1.7 billion in the three months to the end of June, from GBP1.6 billion.
Closing assets under administration climbed 1.5% to GBP134.0 billion at June 30 from GBP132.0 billion at the end of May. Aside from the GBP1.7 billion net new business boost, assets under administration were lifted by GBP300 million in positive market movements.
Shah called the fourth-quarter outturn "modest".
"They are unlikely to significantly change the conversation about the Bristol-based investment manager," the analyst said, noting that the firm's chair stepped down earlier this week.
Deanna Oppenheimer faced criticism from HL's co-founder Peter Hargreaves. Sky News reported that co-founder Hargreaves labelled Oppenheimer's stint at the company as a "disaster".
Edison's Shah added: "Questions remain for the company about high executive remuneration, staffing costs, and a controversial automated investment advice service currently being developed.
"Amidst these tumults, CEO Chris Hill has signalled a 'back to basics' approach for the company, pointing to steady client growth, the launch of new products, and an uptick in new business. This is the bread and butter of an investment manager, far removed from the bold technological schemes of the company's outgoing chair."
Hargreaves Lansdown flagged a weaker quarter for share dealing. Fourth-quarter share dealing averaged 685,000 per month in the quarter, 11% lower than the previous quarter and 12% lower than prior year average.
Hargreaves Lansdown noted investor confidence has been hurt by cost-of-living worries and rising interest rates.
Edison's Shah continued: "With an anaemic investment environment, coupled with the ongoing debate about the company's future, these slow-and-steady results are perhaps the best that Hargreaves Lansdown can currently hope for."
Peel Hunt is slightly more optimistic about Hargreaves Lansdown's prospects. It believes the stock is trading at too low a valuation multiple.
"Hargraves Lansdown is a market leader that is still delivering strong margins and offering good long-term growth prospects," Peel analysts Stuart Duncan and Ryan Flight commented.
Peel rates the stock at 'buy' with a 1,220p price target.
By Eric Cunha, Alliance News news editor
Comments and questions to [email protected]
Copyright 2023 Alliance News Ltd. All Rights Reserved.
Related Shares:
Hargreaves Lansdown