Broker snap: Hargreaves Lansdown fairly valued

19th Apr 2010 13:48

Singer Capital Markets is upgrading its earnings estimates for Hargreaves Lansdown after the wealth management firm said the first three months of 2010 represented the best quarter ever for the company's fund management arm."Given the higher than forecast pace of AuA [assets under administration] growth and revenue run rate, we are upgrading forecasts for the current year ended June by 5% with EPS [earnings per share] (pre-exceptional moving costs) rising from 13.0p to 13.6p. The impact on the next full year is greater with EPS rising 8% from 16.6p to 17.9p," the broker said.Singer believes the shares remain a core holding within the sector, even though they are "reassuringly expensive". The high value put on the shares by the market represents "stability of earnings, strong organic growth, recurring revenues, lack of performance risk and earnings momentum," Singer analyst Sarah Ing maintains.Priced at 23 times projected earnings per share for calendar 2010, the shares are not cheap but Singer "sees no catalyst for a derating." As such, Singer considers the shares as "fair value". It has a price target for Hargreaves Lansdown of 390p.