Shares in AJ Bell PLC (LSE:AJB) were given a boost ahead of a trading update later in the month as Deutsche Bank upgraded to 'buy', saying the recent slide in the investment platform’s share price makes the stock more appealing despite lingering regulatory uncertainty.
The broker had downgraded AJ Bell in December on valuation grounds, arguing that the risk–reward trade-off was fairly balanced.
But with the shares now down 17% since that call - and no major change to the underlying business - Deutsche says the outlook has shifted.
One concern remains: the Financial Conduct Authority is still reviewing how platforms like AJ Bell profit from the interest earned on customer cash.
That income makes up around 44% of AJ Bell’s forecast revenue for the coming year and is roughly equal to its expected operating profit.
Still, Deutsche notes the UK government has been pressing regulators to ease off and focus more on supporting growth, which may help soften any eventual action. The price target is trimmed slightly to 480p.
The stock was changing hands for 409.8p, up 7.9p.
AJ Bell's trading update is due on 24 April.