The US investment bank raised its target price for the FTSE 100-listed firm to 1,870p from 1,755p, albeit with the shares currently trading at 1.913p each, down 3.3% on Tuesday’s close.
In a note to clients, Morgan Stanley’s analysts noted that a weaker UK economic outlook is likely to hit flow for Hargreaves Lansdown in 2019, together with weaker stockbroking fees.
They said: "We see several new headwinds on the horizon which could derail the long-term growth story and trigger share price underperformance.”
Back in October, Hargreaves Lansdown reported a 3% rise in first-quarter assets under administration (AuA) over the previous quarter while also highlighting market uncertainty during the period.
The firm’s AuA rose to £94.1bln in the three months to September 30 from the three months ended June 30. AuA stood at £82bln in the year-ago period.
Chris Hill, Hargeaves Lansdown’s chief executive, said: “The past quarter has seen an uncertain market environment and weak investor sentiment resulting in an industry-wide slowdown in net retail flows.”
He added: “Despite this backdrop, we believe the strength of our business model positions us well for when sentiment improves."