Berenberg upgrades AJ Bell to 'hold'

The bank noted AJ Bell’s momentum from both macro and structural drivers helped the company to beat FY20 expectations, posting results in December that were up by 27% year-on-year at the earnings per share level.

"That is a remarkable performance during a year that was heavily affected by Covid-19 and associated market volatility," it said. "We continue to believe that interest rate cuts in FY20 will create headwinds; however, we now view the FY21 headwinds as manageable in the context of the group’s overall profitability."

Berenberg said it is forecasting flat EPS in FY21 before a resumption of growth in FY22-23, driven by inherent operating leverage and long-term structural growth drivers.

"However, with shares currently trading on circa 50x CY21, we view the company as perfectly priced; hence our hold recommendation."

At 1105 GMT, the shares were up 2.4% at 461.50p.