Hargreaves Lansdown looks expensive after interim miss, says ShoreCap

4th Feb 2015 08:49

Shore Capital said Hargreaves Lansdown has its work cut out for the remainder of the year after the fund manager and savings outfit missed forecasts with its interim results.On the up side, assets under administration rose 4.7% over the six months to 31 December 2014 to a record £49.1bn by 31 December 2014 as the company recorded net business inflows of £2.25bn.But net revenues increased just 1% year-on-year to £144.1m, shy of the consensus estimate of £145.5m, while pre-tax profit fell 2% to £101.9m as margins worsened, missing the £103.2m forecast.Shore Capital said that while Wednesday's figures showed a slight improvement on a "very quiet" first quarter, "[Hargreaves] will still require a further uptick in the second half to meet full-year consensus".The broker pointed out that at Tuesday's closing price of 1,045p, the stock was trading at 28.9 times earnings estimates for the year ending June 2015 and yielding 3.2% including special dividends."We hold the Hargreaves Lansdown business model in very high regard, its asset gathering process remains hugely impressive. However, we believe the current level of earnings growth is out of step with the rating and we see fair value closer to 900p," Shore Capital said.The stock "remains on the expensive side of 'hold'", it said.The shares had fallen over 6% to 981.99p by 09:23.