Berenberg raises target price on St James's Place

(Sharecast News) - Analysts at Berenberg hiked their target price on wealth management firm St James's Place from 1,650p to 1,800p on Friday, following the group's "idiosyncratic Q4" update a day earlier. Berenberg stated St James's Place's fourth quarter funds under management update showed "slightly weaker-than-expected" net inflows, driven by a mixture of budget uncertainty and a change in fee structure in August, which led to some inflows being pulled into the prior quarter.

However, the German bank highlighted that this was "more than offset" by helpful markets, driving a better-than-expected period-end FUM, with retention remaining high following fee changes, while flows were also said to have since normalised in January.

"As such, we expect consensus FY25 diluted cash EPS estimates to nudge up by 2-3% on account of the higher FUM and we remain bullish given St James's exposure to the structural tailwinds in the UK advice market," said Berenberg, which has a 'buy' rating on the stock.

"The shares trade on a CY26 diluted cash EPS of 19.8x, below the historical 12m forward range of 20-25x that the stock traded on prior to 2022. St James's Place is the largest wealth manager in the UK and remains well-placed to benefit from structural tailwinds in the UK wealth market, including increasing demand for advice, reforms that increase the personal responsibility for saving, and an increasingly complex tax code."

Reporting by Iain Gilbert at Sharecast.com