Panmure Liberum lifts its target price from 2100p to 2600p, arguing the market is still pricing in the old Rathbones, not the one Jonathan Sorrell intends to build
Rathbones Group PLC (LSE:RAT, OTC:RTBBF) attracted a high-profile upgrade on Friday as Panmure Liberum moved the wealth manager from hold to buy, citing a strategic overhaul under its new chief executive that the broker believes the market has yet to credit.
The upgrade and what's driving it
The catalyst is Jonathan Sorrell's first full strategic update since taking the top job, in which he set out an ambition to make Rathbones "the best wealth manager in the UK, by far." Panmure Liberum's analysts had long been frustrated by the firm's chronic underperformance on organic growth, arguing it had the brand, scale and financial strength to do far better. The problem, in their view, was a lack of corporate drive. That changes now.
The plan centres on winning new clients more aggressively, improving retention, deepening financial planning and advice services, and simplifying an operating model they say has too many internal frictions. Six senior leadership positions are being refreshed, including a new Chief Technology Officer, Chief Risk Officer and Chief Investment Officer.
The numbers behind the story
Full-year underlying profit before tax came in at £238m, in line with estimates and modestly ahead of last year's £228m. Funds under management ended December at £115.6bn. The company declared a full-year dividend of 99p and announced a further £20m share buyback on top of the £50m programme completed in February.
For 2026, Panmure Liberum expects underlying PBT of £264m, trimmed from £283m to reflect higher strategic and technology spending in the year. Margins are expected to dip to the mid-20s in the first half before recovering, with the company targeting 30% from the fourth quarter.
Why the valuation case is compelling
At around 2,340p (up 6% after the prelims), the shares trade on roughly 12 times 2026 earnings, falling to 11 times in 2027 and 10 times in 2028, with a dividend yield approaching 5%. Panmure Liberum's 2600p target implies the stock still trades on only 13 times 2027 earnings at that level, which the broker describes as no ceiling if Sorrell delivers on the growth ambition.
The market, in other words, is not yet paying for a better Rathbones. That is the bet.