Broker tips: Hargreaves Lansdown, Lamprell

Analysts at Berenberg raised their target price on Hargreaves Lansdown from 1,440p to 1,705p on Friday after the group's trading statement from a day earlier confirmed that customer engagement had accelerated.

Berenberg acknowledged that earnings expectations for Hargreaves Lansdown had declined steeply in 2020, reflecting the decline in financial markets and the reduction in UK interest rates.

However, although Hargreaves' operational backdrop had been challenging, the German bank pointed out how the group's trading statement revealed that it had added 94,000 net new customers in the first four months of the year.

"We view this as testament to the power of the group's brand, the quality of its user experience and (not least) the operational capacity to onboard that many customers amid Covid-19 restrictions," said Berenberg.

Less positively though, Berenberg said the quality of HL's customers appeared to be declining.

"Assuming little change to customer retention rates and flow composition, we estimate the average customer won by Hargreaves in the period had roughly £10,000 in assets, significantly below the current £71,000 average portfolio size."

Berenberg, which reiterated its 'hold' rating on HL, said a higher-than-expected asset base was the primary driver behind the increase in its revenue expectations and stated it should "more than offset" the additional Financial Services Compensation Scheme costs coming the company's way in 2020.

Over at Canaccord Genuity, analysts slashed their target price on oilfield services provider Lamprell from 60p to 30p on Friday but highlighted the firm's solid cash position through 2020 as it reinstated its 'buy' rating on the group.

Canaccord said the drop to Lamprell's target price reflected a weaker outlook through 2020 but stated it believes that following significant cost reductions implemented by the group in early 2020, the close-out of EA1 and expected close-out on Moray East later this year, the firm will likely have "a stable cash balance through 2020" and may even close the year with an increased net cash position.

The Canadian broker also said it was "increasingly bullish" on the prospect for orders for wind jackets and its assumptions now embed Lamprell building jackets for around 500-megawatt peak per year - rising close to 800 MWp by 2023.

"On top of this is the likely award of some Saudi LTA work which we assume happens next year," added Canaccord. "There is considerable scope for upside above this, into wind substations or further oil and gas work, which we do not factor in."

Canaccord said it recognises that gross margins were "unlikely" to reach previous peaks and now assumes a long-term margin of around 17%.