Hargreaves Lansdown PLC (LSE:HL.) shares have fallen 27% since the start of the year to well below pandemic lows and are now "oversold", says Credit Suisse.
The shares are now trading around 19.7 times forward earnings versus a 10-year average of nearly 29,
"Historically, critics of HL have cited three key concerns: i) Fee margins are too high, raising the risk HL loses market share; ii) Operating margin is too high, HL is over-earning and will need to catch up on cost growth in the future; iii) Valuation multiple is too high," the analysts noted.
But in February, the FTSE 100 set out ambitious spending and growth plans for the coming few years.
"The market has heavily discounted the achievability of these targets," the analysts said, but that they believe the concerns are now reflected in earnings forecasts, and are "no longer applicable".
A trading update in mid May will show the impact of current challenges, the analysts said, expecting £1.8bn net new business.
If Hargreaves announces price cuts this would be expected to be received negatively in the first instance, "before fund flow benefits are taken into account".
Ahead of the 12 May statement, the analysts have raised EPS forecasts to reflect market movements, but the price target was cut to 1245p from 1280p, which reflects a shift to an approach that takes the average of two outcomes: "one that assumes achievement of HL targets and one worst case outcome of price cuts and no flow growth".