HSBC analysts rate crisis-hit wealth manager St James’s Place ‘Hold’ after the company cut its dividend and lowered its share buyback programme.
St James’s Place shares sank earlier this month following news the company would be setting aside £426m for potential client redress related to poor service and high fees.
The provisions accompanied a slashing of the dividend to the extent St James’s Place shareholders will receive less the half of the dividend than they did in the prior year.
HSBC addressed whether there were any further ‘big skeletons in the closet’ and concluded the biggest detractors are now known but suggested there are still questions around pricing, product mix and distribution channels.
Given the uncertain backdrop, HSBC lowered its price target to 550p from 740p and has a hold rating on the stock.
HSBC analysts Steven Haywood and Faizan Lakhani wrote in a note:
“We see near-term uncertainty for SJP given ongoing UK macro uncertainty and management’s comprehensive review of the business. Also, we believe there could be some negative sentiment from the potential under-servicing of clients in the past. SJP trades at 2.3x 2024e TNAV with a 17.3% 2026e RoTNAV, and 8.2x 2025e cash PE with a 3.7% 2024e DPS yield and 2.9% 2024e share buyback yield on top.”
