Hargreaves Lansdown faces headwinds, Shore and Jefferies say

The investment platform reported annual underlying pretax profit up 11% to £339.5m as revenue rose 15% to £550.9m. The FTSE 250 company's annual dividend of 54.9p beat expectations for a 45.4p payout.

Shore Capital analyst Paul McGinnis, who rates the shares as 'hold', said new customers recruited during the Covid-19 lockdown had strengthened revenue yields to support the results but that a collapse in Libor rates since April would cut the interest Hargreaves can earn on client cash.

"The PBT (pretax profit) sensitivity of a c50 [basis points] drop in this revenue yield c£12bn of client cash would by c£60m or 18% of the PBT just reported for June 20," McGinnis wrote in a note to clients. "While these results represent a beat, we see profit headwinds for the current year and would be tempted to take profits if the shares move higher on the back of this announcement."

Hargreaves shares rose 2% to £18.69.5 at 15:17 BST.

Jefferies analyst Tom Mills and colleagues, who rate Hargreaves shares as 'underperform', said the results were a "good mixed bag" but warned that fee margins would be squeezed and that this was being overlooked. The results were also flattered by £39m from the sale of FundsLibrary, which more than offset higher operating expenses, they said.

"These are a good set of results, with underlying operating metrics in line with market expectations," Mills wrote in a note. "The high dividend will be attractive, particularly when so many are being cut, but our longer-term view remains negative."