Citi upgrades St James's Place to 'buy' after stock sinks

The bank lifted its rating from 'neutral' to 'buy', saying that the valuation is now "too compelling to continue to ignore".

SJP shares have fallen 60% over the past year as a result of multiple fee reductions, a rebasing of the dividend and past service provisioning.

On Wednesday, the stock dropped 18% after the company's full-year results revealed it was putting aside £426m in compensation linked to the "historic evidencing and delivery of ongoing servicing".

"We see the FY’23 results as a clearing event as SJP, under a new CEO, has now addressed regulatory risk (lower fees, past servicing provisioning and no cash margin) and capital return," Citi said.

"In many ways the bear case has played out and we can’t ignore the dent to its track record but with expectations now re-set, there is a lot of bad news priced in. We upgrade to 'buy'."

The stock was attempting a small rebound on Thursday, rising 1% to 510.39p by 1017 GMT.