Deutsche Bank upgrades St James's Place to 'buy'

Deutsche Bank has upgraded its rating on St James’s Place to ‘buy’, arguing that there is now better visibility surrounding the firm's long-term financial targets.

In February, St James’s Place announced plans to grow new business by 10% per annum, which would give it £200bn in assets under management by 2025.

Deutsche Bank, which previously had a ‘hold’ rating on the global wealth management firm, said it had initially been concerned about the "limited longer-term visibility" around these targets. However, following a recent capital markets day, the bank confirmed it was now taking "a more positive stance" and predicted that the 10% gross flows growth target out to 2025 "could even be exceeded, and could be sustained beyond 2025 as well".

It continued: "While we acknowledge that this is a lower top-line growth rate than historically achieved, we argue that the combination of this with only 5% per annum controllable expense growth over the same period implies the bottom-line growing in excess of 12% per annum, and sustainably so.

"With the shares now trading 20% below their 10-year average rating, relative to funds under management, we lift our recommendation to a ‘buy’."

The target price was also increased, to 1,620p from 1,440p.

As at 1145 BST, shares in SJP were ahead just under 1% at 1,461.5p.