Only a quarter of the investment platform's revenues move directly with asset prices, analysts argue
Deutsche Bank has reiterated its 'buy' rating on AJ Bell PLC (LSE:AJB), the retail investment platform, with a 570p price target, arguing the company's revenues are more resilient to market volatility than widely assumed.
Shares in AJ Bell were up 0.8% at 463p.
Analyst David McCann estimates that only around 24% of group revenues are directly tied to the value of assets held by clients, meaning they fall when markets fall.
The bulk of revenues, approximately 47%, comes from interest earned on uninvested client cash, which is driven by customer numbers and cash balances rather than market levels.
A further 16% derives from transaction fees, which McCann suggests may actually benefit from periods of heightened volatility as clients trade more actively.
The remaining 13% comes from fixed or capped fees linked to client numbers and product mix.
McCann concludes that AJ Bell's revenue growth is driven primarily by how many customers it has and how they behave, rather than by the direction of markets.
Deutsche Bank expects the company to report a solid first quarter.