Hargreaves Lansdown (HL.)

Sector:

Financials

Index:

FTSE 250

736.00p
   
  • Change Today:
    -2.00p
  • 52 Week High: 927.00
  • 52 Week Low: 690.40
  • Currency: UK Pounds
  • Shares Issued: 474.32m
  • Volume: 730,810
  • Market Cap: £3,490.99m
  • RiskGrade: 176

Hargreaves profits surge amid Brexit share frenzy, but shares downgraded

By Oliver Haill

Date: Wednesday 08 Feb 2017

LONDON (ShareCast) - (ShareCast News) - Boosted by a much-elevated level of share dealing since the Brexit vote, Hargreaves Lansdown posted much improved half-year profits and hiked its dividend 10%.
The investments and pensions group processed 1.95m stockbroking deals in the six months ending 31 December, a 51% increase on the previous year, which saw its market share jump to 28% from 23.8%.

However, net new business inflows were down 7%, if excluding the Jupiter and JP Morgan client acquisitions the prior year, with a 22% drop in the first quarter followed by a 10% rise in the second.

Despite the inflated equity dealing, there were increased cash withdrawals post Brexit, but client and asset retention remained strong and almost unchanged at 94.7% and 93.5%.

And at the end of 2016 the number of total active clients stood at 876,000, 40,000 higher over the six months, with total assets under administration climbing 13% to £70.0bn.

Net revenues leapt 16% to £184.8m, while good cost control led to profit before tax surging 21% to £131m, which was ahead of the consensus PBT forecast of £121m and EPS of 20.5p.

After the Bank of England base rate cut in August the net revenue margin on cash fell to 0.51% from 0.55%, though this was better than expected, and directors expect it to be in the range of 0.40% to 0.50% for the full year.

Nevertheless, earnings per share were up 22% to 22.4p and the interim dividend was hoisted to 8.6p.

Looking forward, management seemed uncomfortable providing precise guidance due uncertainty over whether the elevated post-Brexit level of share dealing is a short term effect or a newly sustainable level, "however, elevated levels of trading continue with no sign of material reduction six months on from the Brexit vote" and traditionally the second half of the trading year is consistently the stronger for new business.

"The diversified nature of the Hargreaves Lansdown business has enabled us to deliver significant growth in both revenue and profit," said chief executive Ian Gorham.

"Despite macroeconomic uncertainties impacting investor confidence and net new business, clients continue to trust us with their money and benefit from our market-leading investment services."

Hargreaves shares initially spiked to a year's high above 1,421p before dropping off.

This came as house broker Numis downgraded its rating on the stock to 'hold' from 'buy' due to its recent strong run.

Analyst James Hamilton said PBT was 10% ahead of his estimate due to better than expected cost control combined with the good revenue growth, although AuA were a little behind his forecast of £70.8bn and net inflows were strong at £2.3bn but short of the £2.9bn he expected.

Full year forecasts were upgraded 6% to 43.4p from 40.9p and 49.5p from 46.8p for 2018.

"With the structural growth in self provision, online investing we continue to believe that HL deserves a substantial premium valuation," the analyst said, but while the target price was lifted to 1,497p from 1,458p the recommendation was moved down.

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Note 1: Prices and trades are provided by Digital Look Corporate Solutions and are delayed by at least 15 minutes.

Note 2: RiskGrade figures are provided by RiskMetrics.

 

HL. Market Data

Currency UK Pounds
Share Price 736.00p
Change Today -2.00p
% Change -0.27 %
52 Week High 927.00
52 Week Low 690.40
Volume 730,810
Shares Issued 474.32m
Market Cap £3,490.99m
RiskGrade 176

HL. Star Ratings

Compare performance with the sector and the market.
more star ratings
Key: vs Market vs Sector
Value
19.63% below the market average19.63% below the market average19.63% below the market average19.63% below the market average19.63% below the market average
69.52% below the sector average69.52% below the sector average69.52% below the sector average69.52% below the sector average69.52% below the sector average
Price Trend
27.77% below the market average27.77% below the market average27.77% below the market average27.77% below the market average27.77% below the market average
10.34% below the sector average10.34% below the sector average10.34% below the sector average10.34% below the sector average10.34% below the sector average
Income
83.59% above the market average83.59% above the market average83.59% above the market average83.59% above the market average83.59% above the market average
72.73% above the sector average72.73% above the sector average72.73% above the sector average72.73% above the sector average72.73% above the sector average
Growth
7.80% above the market average7.80% above the market average7.80% above the market average7.80% above the market average7.80% above the market average
23.36% above the sector average23.36% above the sector average23.36% above the sector average23.36% above the sector average23.36% above the sector average

What The Brokers Say

Strong Buy 4
Buy 3
Neutral 3
Sell 5
Strong Sell 2
Total 17
neutral
Broker recommendations should not be taken as investment advice, and are provided by the authorised brokers listed on this page.

HL. Dividends

  Latest Previous
  Interim Final
Ex-Div 29-Feb-24 16-Nov-23
Paid 28-Mar-24 15-Dec-23
Amount 13.20p 28.80p

Trades for 28-Mar-2024

Time Volume / Share Price
16:57 5,454 @ 735.90p
16:35 476,063 @ 736.00p
16:35 2,205 @ 736.00p
16:35 2,375 @ 736.00p
16:35 1,527 @ 736.00p

HL. Key Personnel

CEO Dan Olley
CFO Amy Stirling
Chair Alison Platt

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