Berenberg upgrades Hargreaves Landown, SLA, St James's Place
Hargreaves Lansdown, Standard Life Aberdeen and St James’s Place all gained on Tuesday after Berenberg upgraded their ratings to ‘buy’ from ‘hold’ as it took a look at the asset management sector.
"Three years on from our first initiation, and with a very different economic backdrop in prospect, we believe it is a good time to take another look at the underlying drivers of growth and returns for the European investment and savings stocks," Berenberg said, adding that what it has found is encouraging.
"Investment and savings companies manage wealth, not income, meaning they are well placed to sustain earnings growth even in a 'Japanese-style' low GDP growth scenario. The companies are equally well placed to cope with an inflationary environment - should one materialise - since company pricing models automatically adjust to rising asset prices."
The bank said it carried out a survey of 1,000 users of UK platforms, which had led it become more confident in the long-term growth of Hargreaves Lansdown.
As far as St James’s Place is concerned, it said the post Covid-19 landscape is becoming clearer, allowing investors to again focus on the structural growth and attractive valuation offered by the stock.
Meanwhile, Standard Life Aberdeen, which is now a ‘buy’ for the first time since the 2017 merger, is a "special situation", Berenberg said. The bank said it’s hopeful that the new management team will overhaul the current strategy by cutting the dividend and re-focusing on growth.
In the same note, Jupiter Asset Management was lifted to ‘hold’ from ‘sell’. "Although Jupiter remains overly dependent on just two fund strategies, these are performing strongly currently," Berenberg. "This leads us to tactically upgrade the shares," it added, noting that the longer-term outlook for the group remains challenging.
Schroders and Man Group were kept at ‘hold’, with the former fairly valued according to Berenberg and the latter deserving to trade on a higher valuation multiple but with no obvious catalyst for a re-rating.