Deutsche Numis lowers target price on Hargreaves Lansdown

Numis stated that in the first half, assets under administration increased 6.1% to £142.0bn, with net inflows of £1.0bn, 1% of opening AuA in "very difficult market conditions".

Client retention was 91.6%, down a little from last year, while revenues increased by 5% to £368.0m, against the analysts' forecasts of £369.0m, with underlying costs increasing by 10% to £161.0m.

Deutsche Numis noted that while this was "significant progress", it does not believe HL has reached the "terminal yield" on assets under administration for active savings.

However, the analysts also noted that overall, underlying pre-tax profits increased by 5% to £122.0m, against its forecast of £219.0m and consensus of £215.0m.

"While the AuA was ahead of our forecasts, due to a shift in mix, towards lower-yielding shares away from higher-yielding cash balances our EPS forecast for this year decreases by 2% to 66.9p from 68.5p and by 4% next year to 70.3p from 73.2p. HL is now being valued at 12.0x current year earnings, providing an attractive yield of 6.6%," Deutsche Numis, which reiterated its 'buy' rating on the stock.

Reporting by Iain Gilbert at Sharecast.com