St James's Place misses profit forecasts, but analysts stay upbeat

29th Jul 2014 12:36

Shares in St James's Place (SJP) dropped on Tuesday despite the wealth manager hiking its interim dividend and giving a bullish outlook, as first-half profits came in lower than analysts' expectations.Nevertheless, brokers kept their positive recommendations on the stock, with Berenberg and Panmure Gordon continuing to recommend investors to 'buy' SJP shares, while Numis repeated its 'add' call.Funds under management rose 19% year-on-year to a record £47.6bn in the first half, more or less in line with forecasts, while new business on an annual premium equivalent basis increased by a better-than-expected 20% to £447.9m.However, pre-tax profits on an IFRS basis - which SJP said is its "most appropriate measure of the performance of the business" - fell 8.5% to £82.4m, missing the £91m consensus estimate.Berenberg explained: "IFRS pre-tax profit was a 6% and 9% miss versus our and consensus expectations, respectively, although it appears that much of this miss was due to a change in the accounting treatment of the FSCS levy."According to analysts at Panmure, the outlook for wealth management is "very good, particularly for high net worth clients given the recent changes to ISAs and pension arrangements post Budget".Meanwhile, Numis said that SJP's estimated 13% total shareholder return per annum - based on the current share price - "underpins our modestly positive recommendation".The stock was down 3.1% at 765.5p by 12:36.BC