Bank of America upgrades St James's Place to 'Buy' after share plunge
Andrew Croft (pictured) is the CEO of St James's Place.
The advice giant's shares have fallen by over 26% since the release of its results for the first half of 2023, according to Morningstar data. The H1 2023 results laid out plans to cap product charges at 85 basis points a year for clients who have been invested for a decade.
In a research note on Friday (4 August), Bank of America analysts Andrew Sinclair, David Barma and Freya Kong said this came as a shock to investors, compounding an already challenging backdrop for flows as the cost-of-living crisis bites UK retail savers.
However, they said that although the backdrop will remain «tough», they do not expect further charge cuts in the foreseeable future and think SJP's «market-leading» franchise remains «intact with high barriers to entry».
St James's Place shares slump on Consumer Duty charge cap and inflows slowdown
For this reason, the analysts trimmed their purchase order to 1,150p from 1,175p but upgraded the firm to ‘Buy' with around 40% total return potential.
«We cut our earnings per share by 4-9% on the day and a further 2% today to reflect this. But even after adjusting our forecasts to reflect the challenging UK backdrop, we still see net inflows annualising at circa 4.5% per annum over our forecasting period,» they said.
The analysts noted this is ahead of some peers' achievements «even in benign markets» and argued that SJP still has a market-leading franchise, with flow challenges masking its «dominant market position».
According to BofA, UK consumers are set to experience further cost-of-living challenges as mortgage costs rise and discretionary spending and saving is curtailed, which affects all asset gatherers.
However, it said SJP is
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