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The Markets
by Proactive
Proactive UK has moved.
Coverage of London’s small caps continues on proactiveinvestors.com
Go to Proactive UK
The Markets
by Proactive
Proactive UK has moved.
Small-cap coverage continues on .com
Go to Proactive UK
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The Markets
by Proactive
Proactive UK has moved.
Small-cap coverage continues on .com
Go to Proactive UK

Financial Services

AJ Bell downgraded to ‘hold’ as Berenberg warns firm likely to face “larger downgrades” amid market weakness

The bank said the investment platform would come under pressure from "both falling interest rates and its direct-to-consumer exposure"

AJ Bell PLC (LON:AJB) has been downgraded to ‘sell’ from ‘hold’ by analysts at Berenberg as the bank said the investment platform was “likely to face far larger downgrades to estimates than peers” as markets continued to weaken.

In a note on Thursday, Berenberg also cut its target price for the company to 280p from 370p, saying AJ Bell was “geared to interest rates” and that the recent 50 basis point emergency rate cut from the Bank of England amid the coronavirus crisis was “likely to have a 15%-plus negative impact on consensus [pre-tax profit estimates for 2020]”.

They added that AJ Bell’s direct to consumer (D2C) assets under administration were “likely to be more volatile, since D2C customers both hold a greater mix of equities and could be more susceptible to changing sentiment”.

“We believe the market is yet to adjust to the unique impact on AJ Bell’s earnings from both falling interest rates and its direct-to-consumer exposure”, the bank concluded.

AJ Bell’s share slumped 16% to 261p in mid-morning trading.

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