On Friday, Berenberg updated its outlook on AJ Bell (AJB:LN) shares, increasing the price target to GBP4.10 from GBP3.70, while reaffirming a Hold rating on the stock.
The adjustment follows AJ Bell's third-quarter update, which revealed a rise in shares by approximately 6% on the day of the announcement. The platform experienced growth in its assets under administration (AuA), attributed to both positive net flows and favorable market movements.
The direct-to-consumer (D2C) and advised channels of AJ Bell both performed well during the quarter, with customer numbers increasing in both segments. The company's management emphasized that AJ Bell is entering the fourth quarter with "strong momentum." This growth trajectory suggests that AJ Bell is positioned to continue capturing market share and fostering long-term earnings expansion.
Despite the positive quarterly performance, the firm's Hold rating remains unchanged. The decision to maintain the rating is influenced by the ongoing regulatory uncertainties surrounding the interest income earned by investment platforms on client balances. This factor appears to be a significant consideration in the analyst's assessment of AJ Bell's stock.
The revised price target from 370p to 410p reflects updated forecasts, taking into account the company's recent performance and market conditions. The new target indicates a recognition of AJ Bell's solid quarter and the potential for continued growth, balanced by a cautious approach due to the regulatory landscape.
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