Analysts at Berenberg slashed their target price on financial services firm Hargreaves Lansdown from 1,700.0p to 1,250.0p and downgraded the stock to ‘hold’ on Thursday, stating catalysts appeared to be limited, for now.
Berenberg noted that Hargreaves Lansdown’s share price was down roughly 14% since its interim results on Tuesday due to a combination of lighter-than-expected net new business and earnings per share, alongside a suspension of special dividends and a higher cost trajectory than its analysts had predicted.
The German bank said it still thinks Hargreaves Lansdown’s strategic plan to future-proof the business was “logical”, that the group remains “favourably exposed” to UK retail wealth structural growth trends and that its first-half results likely drove a material reset of investor expectations.
However, Berenberg highlighted that it now struggles to find a near-term catalyst to drive outperformance, given increased outlook and execution uncertainty.
“As such, although HL trades at a discount to long-run consensus multiples, on circa 20x our full-year 2024 earnings per share, we downgrade to ‘hold’,” concluded the analysts.
Analysts at Deutsche Bank raised their target price on Holiday Inn owner InterContinental Hotels Group from 5,610.0p to 5,700.0p on Thursday following the firm’s “robust” full-year results.
Deutsche Bank stated it remains confident in IHG’s growth and recovery prospects due to the fact the overhang of exits now seemed to be over, with the group targeting net system size growth of over 4% for 2022e and more than 5% for 2023. The analysts also noted that this was after factoring in roughly 1.5% of exits in the system.
“The current pipeline stands at circa 31% of the group portfolio, so there is good visibility on growth ahead,” said DB.
The German bank noted that with the US recovering to near pre-crisis levels in the fourth quarter and a continued recovery in Europe on the gradual relaxation of restrictions, accommodation demand should drive growth ahead and also said that margins should remain ahead of pre-Covid levels given structural cost savings of $75.0m and strong cash generation.
