Jefferies upgrades Hargreaves Lansdown, AJ Bell

Jefferies upgraded its stance on AJ Bell and Hargreaves Lansdown on Tuesday to ‘hold’ from ‘underperform’.

Jefferies hiked the price target on Hargreaves Lansdown to 930p from 800p.

"In common with other platforms, the quarterly mark-to-market was better than one might have expected because of the weighting to US equities and the weak pound," it said. "We have applied a 2% headwind to assets under administration in 1H, but raised our estimates for the revenue margin on cash considerably, hitting 150bps in FY24.

"This lifts our discounted cash flow valuation to £9.30, and we raise our recommendation to hold: there may be some challenges ahead, but this is a good and highly profitable business."

The bank lifted its price target on AJ Bell to 250p from 220p, noting the share price has fallen somewhat, while interest rates have risen.

"Our mark-to-market for the quarter is negative, and we have assumed that flows slow in FY23 on investor uncertainty, but these factors are outweighed by our interest income margin changes," it said.

"In our view, the company remains well-led following recent changes."

At 0930 BST, HL shares were up 6.6% at 916.20p, while AJ Bell shares were 5.6% higher at 294.20p.