AJ Bell PLC (LSE:AJB) has got the red pen treatments from analysts at Citi, who have downgraded the wealth platform to a ‘sell’ even with falling interest rates and increasing capital markets activity.
Risks from cash balances and competitor pricing are the reasons. Citi notes that Bell has taken significant market share in recent years, with platform asset (AUA) growth driving consensus upgrades.
“However, we expect price cuts for its largest D2C [consumer] competitor, which may slow growth.
“Our analysis suggests that AJ Bell is overearning on client cash balances, which account for c13% of D2C AUA.
“We expect this to fall, with a 2ppt reduction becoming a 15% EPS headwind.
“Our EPS estimates are 10-20% below consensus and we cut our 2027 EPS estimate by 5%.”
Citi’s target price drops from 450 to 390p.
Shares in AJ Bell fell 5% today to 429p.