Analysts upbeat on Hargreaves Lansdown's outlook, but valuation seen as generous

Analysts appeared to remain generally upbeat on the prospects for Hargreaves Lansdown despite the small 'miss' by the financial products supermarket on its first half profits when compared with market expectations.

For analysts at Nomura, the Bristol-based firm continued to be well-placed to capitalise on the themes of the UK´s pensions reforms, the gap in the market for providing advice to retail investors and the ongoing shift towards digital.

Nevertheless, while the Japanese broker believed all of that merited a "clear premium" versus asset managers, on the basis of the valuation multiples its shares were already sporting Nomura said it retained a preference for the likes of St.James´s Place.

The latter was trading at an estimated 2016 price-to-earnings multiple of 23 versus 31 for Hargreaves Lansdown, despite St.James´s Place offering superior earnings growth, dividend yield and dividend growth.

RBC was of a somewhat similar opinion, telling clients on Wednesday that: "We recognise that the business remains strong, and continues to make market share gains. However, at 25 times estimated earnings per share for calendar year 2017, Hargreaves remains the highest rated stock in our coverage universe by a significant margin and therefore we expect some share price weakness following today's results."

As of 14:06 shares in Hargreaves Lansdown were retreating by 3.34% to 1,273p.