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Hargreaves Lansdown gets Liberum downgrade after flight to quality

Brewin Dolphin and AFH Financial were highlighted by analysts as better investment opportunities

Hargreaves Lansdown PLC -

Broker Liberum downgraded Hargreaves Lansdown PLC (LON:HL.) as it noted that a "flight to quality" among investors has seen the investment platforms outperform the broader market by 12% in recent weeks.

"As a result, we see them less attractive than previously", the analysts said, so consequently cutting their rating on Hargreaves to 'hold' from 'buy' as the revised target price of 1,540p would offer only a small potential gain.

Instead, the analysts said they advocate investors seek exposure to some of the same structural growth drivers and look to the wealth managers, "especially given the presence of less volatile financial planning revenues".

Brewin Dolphin Holdings (LON:BRW), with an advice-led offering that is seen as a key competitive advantage, and AFH Financial Group PLC (LON:AFHP) are seen as best placed in this category, with the latter having a much higher proportion of initial advice fees than the larger wealth managers and 20% of revenues come from protection.

Quilter PLC (LON:QLT) was highlighted as "likely to emerge from this year as a leaner and more focused business" and similarly Premier Miton Group PLC (LON:PMI) was said to be "well placed to navigate the current short-term uncertainties".

The benefits of Premier Miton's merger are "underappreciated", the number crunchers believe, as it is creating a "well-diversified platform for growth and the funds continue to perform well".

Despite being downgraded, Liberum still sees Hargeaves’s strong brand, service levels, technology platform and pricing strategy will mean it remains "the clear market leader" in the direct-to-consumer platform market.

Quick facts: Hargreaves Lansdown PLC

Price: 1563.5 GBX

Market: LSE
Market Cap: £7.42 billion

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