UK wealth managers might be on the cusp of a revival after the beating they’ve taken in the past twelve months, according to analysts at JP Morgan.
Notably, the US bank has upgraded St James's Place PLC (LSE:STJ) to overweight, from neutral, with a similar upgrade for rival Quilter PLC (LSE:QLT).
Price targets for the two are now 730p (SJP) and 135p (Quilter) respectively.
“After a very challenging period for UK wealth managers, we believe that the combination of improving flows, high EPS growth, and fading regulatory headwinds will lead to improving sentiment and positive share price performance,” said the bank.
For Quilter, JP Morgan estimates a fairly small (less than 10% of market cap) redress provision with its first-half numbers on August 7, which should clear the decks and allow the focus to switch to strong flow momentum, double-digit EPS growth, and attractive valuation.
At St James’s Place, too, JP Morgan sees most of the bad news in the rear-view mirror.
“The resilience in gross flows of the past quarters might suggest smaller-than-anticipated headwinds, and we do see upside risk to consensus net flow estimates," it said.
“In our view, the current valuation reflects uncertainty, which should begin to dissipate and does not capture future growth prospects,” JPM told investors.
Shares in SJP rose 4% to 519.5p and Quilter by 3.8% to 112.3p.