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Brewin Dolphin weak as first-quarter funds under management decline; Liberum cuts target price

The FTSE 250-listed wealth manager said it saw a 7.7% fall in total funds to £39.5bn, down from £42.8bn as at September 30, driven by lower market levels

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Liberum Capital lowered its target price for Brewin Dolphin shares to 344p, down from 394p previously, but maintained a ‘buy’ rating

Brewin Dolphin Holdings PLC (LON:BRW) saw its shares fall on Wednesday after the wealth manager reported a fall in first-quarter funds under management, with Liberum Capital prompted to reduce its target price for the stock.

In a trading update for the three months ended 31 December 2018, the FTSE 250-listed firm said it saw a 7.7% fall in total funds to £39.5bn, down from £42.8bn as at September 30, driven by lower market levels.

READ: Brewin Dolphin posts higher profits as inflows continue

The company's net fund flows for the period were £400mln, up 3.7% year-on-year, boosted by £500mln of net flows into its discretionary funds, representing a 5.3% growth.

But its total income decreased by 1.6% in the first quarter to £77.7mln, down from £79.0mln a year earlier, driven by a 1.2% fall in income from its discretionary funds to £66.5mln.

Brewin Dolphin chief executive David Nicol said: “The first quarter has been characterised by lower market levels and ongoing macro-economic uncertainty.”

He added: “Against this backdrop, net discretionary inflows have remained strong and ahead of our 5% target, albeit intermediary client activity has slowed whilst intermediaries and their clients assess the current environment."

Net flow estimates cut

In a reaction note to clients, analysts at Liberum Capital reduced their estimate for discretionary net flows to an annualised 5%, down from 7%, and cut their earnings per share forecast by 10.5% after mark to marketing funds under management.

They lowered their target price for Brewin Dolphin shares to 344p, down from 394p previously, but maintained a ‘buy’ rating on the stock.

The analysts said: “We believe BRW should trade to 16x given its delivery of strategic targets and strong organic discretionary flows.”

In afternoon trading, Brewin Dolphin shares were 3.5% lower at 303.60p.

Quick facts: Brewin Dolphin

Price: 281.5 GBX

LSE:BRW
Market: LSE
Market Cap: £853.6 m
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