Berenberg downgrades AJ Bell to 'sell'

Berenberg said the multi-year growth story at AJ Bell remains compelling. However, it highlighted two reasons why AJ Bell is likely to face far larger downgrades to estimates than peers.

“Firstly, it is geared to interest rates, and Wednesday’s 50 basis points base rate cut is likely to have a 15%-plus negative impact on consensus 2020 profit before tax (the company addressed this in an RNS late on Wednesday afternoon).

"Secondly, AJ Bell’s D2C AUA is likely to be more volatile, since D2C customers both hold a greater mix of equities and could be more susceptible to changing sentiment."

In the same note, Berenberg said IntegraFin remains its top pick in the sector, as its net flows have been higher and more resilient than peers’ in a range of market conditions, and have been the highest of any adviser platform in four of the past five quarters.

"On this basis, we believe IntegraFin is best placed to outgrow market weakness across each year in our forecast period," it said.

It rates IntegraFin at ‘buy’ and cut the price target to 470p from 490p.

At 1340 GMT, AJ Bell shares were down 17% at 257.00p.

On Wednesday, the company said it was "difficult to predict" the impact on its trading performance of the Bank of England’s surprise interest rate cut and the recent slump in global stock markets on the back of coronavirus fears.