Shares in Quilter PLC (LSE:QLT) rose 6% after UBS upgraded the stock to 'buy', citing growing confidence in the wealth manager’s ability to deliver stronger fund flows and margin expansion over the medium term.
Following a series of meetings with the wealth manager and its peers, analysts now see a clearer path to improved performance.
They’ve lifted their price target from 165p to 190p and now expect the company to generate around 7% net client cash flow as a percentage of assets under management and administration (AUMA), ahead of current market expectations.
Quilter’s platform business has made notable gains in market share for gross flows, and UBS sees room for further improvement if outflows moderate as interest rates fall.
UBS forecasts the Bank of England base rate dropping to 3.75% in 2025 and 3% in 2026, which should help reduce withdrawals, particularly from mortgage-linked investments.
Despite trimming near-term earnings estimates slightly, UBS expects Quilter to post around 12% compound annual growth in earnings through to 2029. That would bring the stock’s price-to-earnings ratio down to about 12x by 2027.
There could also be a shareholder payout in the works. UBS believes a review of Quilter’s capital needs could result in a special distribution worth up to 3.5p per share.
The shares rose 9.2p to 165.7p on the back of the UBS note.