Deutsche Bank has set a target price of 700p for AJ Bell PLC (LSE:AJB) while maintaining its 'buy' rating, citing strong direct-to-consumer customer growth and continued marketing momentum.
Shares in the company last closed at 583.5p.
Analyst David McCann said AJ Bell continues to report very strong growth in direct-to-consumer customers, with the third quarter showing a 7% rise quarter on quarter and a 30% increase year on year.
McCann said this growth has been partly driven by continued marketing momentum, including a recent brand refresh.
He said the lifetime value of each new customer continues to significantly exceed the cost of customer acquisition.
In June, Deutsche Bank raised its target price for AJ Bell to 675p from 600p, citing improved distribution economics and an updated valuation.
Deutsche Bank said it continues to strongly support the company's strategy of investing in marketing to drive customer growth and ultimately future revenue and profit growth.
McCann said there is a growing case that management could meaningfully increase marketing investment into the 2027 financial year, given the momentum in the strategy.
He said that if this happens, management would likely continue to do so in a measured way.
This would include preserving a pre-tax profit margin of around 40%, he added.
McCann said this approach would achieve a good balance between short-term shareholder returns and future growth.
The note frames the marketing spend as creating a short-term margin headwind while supporting long-term value creation for the company.
