RBC Capital has raised its price target for St James's Place PLC (LSE:STJ) to 1,350p from 1,300p, citing stronger markets late in the year, but struck a cautious tone on near-term client flows.
Sticking with its 'sector perform' rating, the bank has trimmed its forecast for net inflows in the fourth quarter to £0.9 billion, down 41% from a year earlier and almost half lower than the previous quarter.
RBC said the outlook is clouded by higher withdrawals across the advice sector, partly driven by speculation over changes to pensions policy ahead of the Budget.
Based on results already reported by peers, RBC now expects St James’s Place to see outflows of £4.7 billion in the quarter, up 19% both year on year and quarter on quarter. That would broadly match trends seen across other listed advice-led businesses.
Inflows are expected to hold up better, but remain highly company-specific. RBC forecasts gross inflows of £5.6 billion, up 2% on the year but slightly lower than the previous quarter.
It said engagement linked to changes in the group’s charging structure likely pulled some business forward into earlier periods, complicating the picture. A range of outcomes between £5.1 billion and £6.1 billion remains plausible.
Despite the weaker flow outlook, RBC made small upgrades to earnings forecasts after factoring in positive market movements in the fourth quarter.
Assuming investment returns of about 3% over the period, the bank lifted earnings per share estimates by up to 3% over the next three years.
RBC said the share price reaction to the results is likely to depend less on the fourth-quarter number itself and more on any guidance about future inflows. Investors will be looking for reassurance that recent changes to charging structures do not have longer-term implications for organic growth, with a “clean” quarter of flows potentially needed to settle those concerns.
The shares were flat at 1,504.5p.