Canaccord upgrades Rathbone Partners to 'buy', spies 'attractive' entry point

They pointed to the company's continued investments to upgrade its capabilities and the likelihood that it would continue to carefully participate in the consolidation of its sector as reasons to buy into the stock.

Linked to the latter, they highlighted that its industry benefited from scale.

"We believe investors looking for medium-to long-term buy and hold stocks should look closely at the wealth management sector and, at this price, Rathbones in particular," they said in a research note sent to clients.

They also highlighted valuation support from the firm's roughly 5.0% dividend yield.

Nonetheless, in the wake of the company's 2019 numbers and update on first quarter 2020 trading, they cut their estimate for its 2020 earnings per share by 30% and that for 2021 by 28%.

In turn, that led Canaccord to lower its target price from 2,049.0p to 1,846.0p.

They were also anticipating an average rate of growth in the group's funds under management of 2.1% over the calendar years 20-2022, versus Rathbone management's target of 3.0%.

"However, we believe these challenges are fully priced in. Times of market dislocation have historically proven to be attractive entry points for investors seeking exposure to the wealth management sector."