logo-loader

Analysts take axe to Hargreaves Lansdown forecasts for coming quarters

Published: 04:20 13 May 2022 EDT

Hargreaves Lansdown PLC -

Several brokers cut their forecasts and target prices for Hargreaves Lansdown PLC (LSE:HL.) after the investment platform’s update yesterday that saw an £11.4bn decline in the value of client assets for the past quarter.

The results fell short of analyst consensus on nearly all fronts, namely inflows, assets and customer numbers.

Credit Suisse slashed its price target by 20% to 1000p after cutting earnings per share forecasts for the current and next two years by 2% to 28%.

“These changes reflect the impact of cyclical factors, most notably the continued fall in market values, particularly Nasdaq Composite and US technology stocks,” the investment bank said.

At Deutsche Bank, analysts said the weak quarter is expected to persist in the short-term.

“Despite the higher cash margin guidance for this year and the company's confidence around the strategic plan, we think the uncertain macro environment for the rest of the year combined with weaker markets, the miss in flows in 3Q22 and lower AuA could lead to consensus downgrades across FY22-FY24.”

Liberum downgraded to a ‘hold’ recommendation and reduced its target price from 1140p to 950p on weak net new business (NNB) flows, impacted by weaker investor sentiment and a rising cost of living, and slowing net new client growth.

The broker reduced 2023 EPS estimates by 6% “as the increase in net interest margin guidance is more than offset by lower NNB and market movement assumptions”.

Liberum estimates now assume that capital markets day for 2026 NNB “will be missed”.

Deutsche and Credit Suisse reiterated their respective ‘hold’ and ‘outperform’ ratings.

Deutsche said that with the shares trading at 20 times 2023 statutory earnings, “we think the shares are reflecting concerns about this; however, we think this overhang is likely to remain for the coming months”.

Credit Suisse noted that HL “did not see net outflows in the 2008/09 recession, and we do not expect it to do so now. Demographic drivers for growth in saving and investment remain intact. Net new business should offset the impact on AUA of lower market levels, and rising UK interest rates are beneficial.”

Ramp Metals Launches Drilling Program in Pursuit of High-Grade Nickel in...

Ramp Metals CEO Jordan Black joined Steve Darling from Proactive to introduce the company to the public domain and share exciting developments in the mining industry. With a background as a geotechnical engineer and experience in venture capital, including a notable role in taking GoldSpot...

1 hour, 21 minutes ago