LONDON (ShareCast) - After upgrading their rating on Hargreaves Lansdown just last month, analysts at Citigroup have cut the stock from 'neutral' to 'sell' following the recent run in the share price.
"We upgraded from 'sell' to 'neutral' last month. Recently, however, shares have rallied strongly and there is now 17% downside to our target price," the bank said on Monday, causing the stock to drop sharply.

"We move back to 'sell' but make no change to [...] forecasts or 830p target price."

Citigroup reckons that fund platform fee rates will fall below HL's 0.44% guidance with the company's pricing remaining at the high end compared - established peers charge 0.35%, while new entrants to the market only charge 0.25%.

"Perhaps competition will mean less assets under administration growth rather than margin decline - but either way, we see revenue pressure as likely," Citi said.

Meanwhile, while fund fees are the 'highest quality' recurring element of HL revenue, Citi said that its growing exposure to stockbroking income - set to grow to 18% of revenue from the Vantage division this year - is more volatile.

HL's shares were down 3.9% at 973.5p by 11:42.

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