Aberdeen Group PLC (LSE:ABDN) has earned an upgrade from RBC Capital Markets, which has moved the stock from “underperform” to “sector perform” and lifted its price target from 140p to 195p.
The broker says progress across the business is finally starting to show through, though the recovery remains tentative.
The most notable shift is within Institutional & Retail Wealth (I&RW). This division had seen revenues collapse by almost 60% over the past eight years as client money bled away.
In the second quarter of 2025, however, net inflows turned positive (excluding cash funds), which RBC describes as a “milestone”.
Net flows measure the balance of money going in and out of investment products: positive figures matter, as they lay the groundwork for future fee income.
Cost efficiencies, with Aberdeen on track to strip out over £150m annually by the end of 2025, should reinforce the turnaround.
The Adviser platform has endured a revenue reset after lowering fees and simplifying charges. Margins are now guided to 27 basis points (hundredths of a percentage point) for 2025, down from 31bps a year earlier.
While that initially dents profitability, the division has posted four consecutive quarters of positive flows. According to RBC, this suggests operational improvements and better service are helping to rebuild trust with advisers.
The jewel in Aberdeen’s crown is interactive investor (ii), the direct-to-consumer platform it bought in 2022.
Customer numbers are growing at around 8% a year, while higher interest rates mean cash balances generate steady “treasury income”.
RBC notes that ii already underpins more than half of group earnings, with new launches such as a managed self-invested personal pension (SIPP), the ii 360 trading platform and a digital advice service promising further growth .
After a 49% total return year to date, the shares trade on about 14 times forecast earnings, in line with Aberdeen’s five-year average and peer valuations.
RBC has nudged its operating profit forecasts higher for 2025–27, but at £271m in 2026, they still fall short of the company’s £300m-plus target. The broker concludes the stock is “fairly valued” at current levels.
The bank warns that stiff competition in the direct-to-consumer and adviser markets could squeeze margins, while a shift of client cash into other products would hit treasury income. Debt levels are also higher than peers.
On the flip side, stronger equity performance, new insurance mandates or further cost cuts could accelerate the recovery.
In afternoon trading, the shares were up 1% at 197.19p.