Analysts at Citi have initiated Quilter PLC (LON:QLT) with a ‘buy’ rating but has also downgraded peer Hargreaves Lansdown PLC (LON:HL.) to ‘sell’ from ‘neutral’ as they reassessed their views on the UK’s wealth managers.
In a note on Tuesday, the bank said it was attracted to “the long term structural growth and earnings quality” of the sector, however, they were selective due to “near term headwinds”.
Citi said it preferred Quilter over fellow wealth manager St James’s Place (LON:STJ), which itself was preferred over Hargreaves.
“We prefer [Quilter’s] risk-reward…given upside potential from platform conversion/affinity growth and near-term buyback support”, the bank said, adding that they saw a “lack of near-term catalysts” for Hargreaves and expected a “weaker” 2021 financial year from the group, justifying the ‘sell’ rating.
Shares in Quilter were down 1.5% at 142.3p in lunchtime trading, while Hargreaves shares fell 2.1% to 1,587p.