Citi downgrades Hargreaves Lansdown to 'sell'

The stock’s valuation looks rich, revenues are more likely-than-not to fall next year, and net new business is likely to slow from the exceptionally strong 11.5% annualised growth rate over January to April, Citi said.

"We see some upside to consensus, but in our view the risks outweigh the positives and so we downgrade our rating on HL shares to sell from neutral, new target price £15.6.

"We are constructive on UK wealth secular growth, which we see as one of the few credible structural growth stories within European financials.

"As the leader in the UK D2C platform market, HL is well positioned to benefit from the trend of off-platform assets moving onto platforms."

However, the bank said it prefers to play UK wealth via intermediary peer Quilter, which is a self-help driven recovery story with more catalysts.