JPMorgan downgrades Quilter, puts stock on 'negative catalyst watch'

JPMorgan Cazenove downgraded Quilter on Tuesday to ‘underweight’ from ‘neutral’ and cut the price target to 74p from 83p, placing the stock on ‘negative catalyst watch’.

"We expect negative flow momentum to continue in 1H23; the outlook remains uncertain and IFAs continue to consolidate flows on fewer platforms," JPM said.

"We also place Quilter on 'negative catalyst watch' as we are 8% below consensus on 2023 earnings per share, driven by higher expected costs, as we believe that the largest proportion of the cost savings targeted (£45m by 2024) will be back-end loaded."

JPM also argued that the valuation seems excessive, trading at 17.3x estimated 2023 EPS.

In the same note on wealth managers and platforms, JPM maintained its ‘underweight’ rating on Hargreaves Lansdown.

At 1300 GMT, Quilter shares were down 4.5% at 97.24p.