Berenberg lowers target price on 'resilient' St James's Place

Analysts at Berenberg lowered their target price on wealth manager St James's Place from 1,500.0p to 1,365.0p on Monday but remained positive on the group as a whole.

Berenberg stated St James's Place was "well positioned" to benefit from structural growth tailwinds, supported by high retention, low client price elasticity, low net flow volatility and better relative advisor growth prospects.

The German bank, which also reiterated its 'buy' rating on the stock, noted that SJP's recent net flow performance helped highlight a model that can "better weather falling consumer confidence" and a "tougher economic backdrop" relative to some of its peers, due to its "more resilient client base and product set".

"Although near-term sentiment may remain challenged given SJP is materially exposed to markets, we believe that the long-term thesis is unchanged. This rests on greater pension and investment market participation and the unwind of suboptimal financial advice consumption," said the analysts.

"SJP is best placed given its relative first-mover advantage compared to most peers, alongside its better ability to grow its advisor base given its academy, as the wider UK advisor population potentially shrinks due to its advancing average age. The constrained UK advisor market may also support price resilience and help preserve barriers to entry in the UK advice market."

Berenberg cut its earnings per share estimates on the stock by 9%, mainly due to market performance.

Reporting by Iain Gilbert at Sharecast.com