RBC has upgraded Rathbones Group PLC (LSE:RAT, OTC:RTBBF) to 'outperform', arguing that investors are missing the long-term earnings power and capital return potential of the wealth manager.
The analysts point to a combination of strong growth prospects and an underwhelming valuation.
Now that the integration of Investec Wealth & Investment is nearing completion, RBC expects Rathbones to deliver 7.1% compound annual earnings growth through to 2027, with net inflows picking up in the second half of this year.
Despite that, Rathbones trades at a price-to-earnings multiple of just 9.6 for 2025 - well below sector peers like Quilter and St James’s Place.
A special dividend or buyback is also on the cards.
The shares were flat at 1,548p.