LONDON (ShareCast) - (Sharecast News) - Hargreaves Lansdown was under pressure on Monday as Jefferies downgraded the stock to 'underperform' from 'hold' on valuation grounds, saying the shares currently look overvalued.
"Even including 2019e total forecast dividend of 51.1p we have close to 15% downside from the current share price," Jefferies said.

In a note on asset managers and in light of last week's news that the Financial Conduct Authority is considering banning online investment platforms such as Hargreaves from charging exit fees, the bank pointed out that HL does not benefit greatly from exit fees.

"The point about HL is that in fact very few clients leave and therefore it is safe to assume that a fraction of a percent of revenue is derived from exit fees. On the negative side, we could say that anything that promotes greater switching is negative for HL's rating.

"We have always stated that its premium rating is in part explainable by the fact its clients are highly persistent. But on the positive side HL, given that it actually gains market share, is a beneficiary of industry transfers."

As far as the company's full-year results in August are concerned, Jefferies - which has a 1,650p price target on HL - expects reported pre-tax profit of £293.2m for 2018, up 9.5% year-on-year, and assets under management of £92.6bn.

At 1120 BST, the shares were down 1.8% to 2,085p.

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