Deutsche Bank upgrades St James's Place to 'buy'
By Abigail Townsend
Date: Monday 21 Jun 2021
(Sharecast News) - Deutsche Bank has upgraded its rating on St James's Place to 'buy', arguing that there is now better visibility surrounding the firm's long-term financial targets.
In February, St James's Place announced plans to grow new business by 10% per annum, which would give it £200bn in assets under management by 2025.
Deutsche Bank, which previously had a 'hold' rating on the global wealth management firm, said it had initially been concerned about the "limited longer-term visibility" around these targets. However, following a recent capital markets day, the bank confirmed it was now taking "a more positive stance" and predicted that the 10% gross flows growth target out to 2025 "could even be exceeded, and could be sustained beyond 2025 as well".
It continued: "While we acknowledge that this is a lower top-line growth rate than historically achieved, we argue that the combination of this with only 5% per annum controllable expense growth over the same period implies the bottom-line growing in excess of 12% per annum, and sustainably so.
"With the shares now trading 20% below their 10-year average rating, relative to funds under management, we lift our recommendation to a 'buy'."
The target price was also increased, to 1,620p from 1,440p.
As at 1145 BST, shares in SJP were ahead just under 1% at 1,461.5p.
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