Broker tips: Jupiter Fund Management, AJ Bell, Direct Line


Barclays improved Jupiter Fund Management Wednesday to “equal weight” from “underweight” and cut its price target on the stock to 110.0p from 120.0p as it indicated a discounted valuation and budding optimism.

“A new CEO, a cost-cutting strategy, early signs of progress securing institutional mandates and a rock-bottom valuation multiple mean we consider Jupiter’s risk-reward balance to be balanced,” said the bank.

“While the dynamics of retail flows remain concerning, after a 23% drop in assets under management since the start of the year, we are moving to EW.”

Coastal capital lowered his rating for the online broker A.Bell on evaluation issues.

The broker, which reduced its rating on the stock from ‘hold’ to ‘buy’, said: “Recommended and direct-to-consumer platforms continue to take market share, and we believe that organic growth, above all impact on the market, to be 5-6% for the full year 2023, even after taking into account much more difficult economic circumstances.Fourth quarter growth was 7% annualized.

“Despite greater caution on net new funds and a higher tax rate in our new figures, the combination of earnings return expectations slightly ahead of consensus and a significantly positive market value since the beginning of the quarter, means that our full year 2023 forecast [for] earnings per share are unchanged.”

However, Shore Capital added that it loved the company, but believed its valuation was now sufficient.

“Organic growth in this economy is expected to be weaker, but the stock is on the same 2023 multiple of 24.8 times as it was on January 17. It is also trading at a record premium to Hargreaves Lansdown. Discounted cash flow suggests a fair 300p valuation.”

The analysts of Berenberg slightly lowered their price target on the insurer Direct line from 266.0p to 259.0p on Wednesday after the group’s third-quarter trade update fell short of consensus estimates.

Berenberg said the problem with Direct Line, which also issued a disappointing forecast, remains its motor insurance business, where premiums fell 9% year-on-year, as well as combined ratio forecasts. higher due to a delay in settlement. bodily injury.

“While the investment income forecast was raised, which is a positive, the biggest question mark for investors was that they could see no evidence of price increases in the figures reported by Direct Line, being given that premiums are actually falling faster than policies,” Berenberg said.

The German bank added: “We are reducing our estimates for the new combined ratio guidance and lowering our premium estimates; however, we reiterate our view that Direct Line will maintain its dividend policy. Direct Line is trading at 7.7x 2023E EPS, for a 2022E dividend yield of 11.4%.

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