Numis bumps Hargreaves up to 'add' after results

9th Sep 2015 11:27

(ShareCast News) - Numis upgraded Hargreaves Lansdown to 'add' from 'hold' and lifted its price target to 1,280p following the company's results, which it said showed a strong underlying performance.Numis said the numbers were in line with forecasts in terms of profit, but the 18% growth in client assets was ahead of expectations.It said Hargreaves continues to increase its market share in a structural growth market with its share of platform assets increasing to 35.0% from 33.6% and its share of ISA flows increasing from 10.9% to 14.1%."We continue to believe that HL justifies a significant premium valuation given its dominant market position in a growth segment of a growth market," Numis said.Numis said the group's scale benefits are substantial and unmatched providing it with by far the highest operating margin and the buying power to provide the cheapest fund prices in the market."We expect the high marginal margin and industry growth to more than offset the expected ongoing industry price compression."As far as the industry in general is concerned, it expects substantial growth due to the increase in self-investment and the shift from defined benefit pensions to defined contribution pensions.In addition, it said auto-enrolment should significantly increase the proportion of the population with money to manage most of which will have to be done through self-invest platforms like HL due to the scale of these pension assets.At 1133 BST, Hargreaves shares were up 5.7% at 1,178p.