Strong results from Hargreaves Lansdown fail to beat a FTSE slump

by

The FTSE 100 was feeling the effects of a market sell-off this morning (Source: Getty)

Investment platform Hargreaves Lansdown succumbed to the FTSE slump this morning, as its share price fell more than three per cent despite a strong set of first-half results.

The figures

Hargreaves' net revenue climbed 17 per cent year-on-year to reach £216m, smashing through consensus predictions of £212.9m.

Profit before tax meanwhile jumped 12 per cent to £146.9m, which hiked earnings per share to 25p.

Analysts at Barclays were "surprised" by investor inflows to funds on the platform of £3.34bn, compared to a consensus of £3.2bn.

Read more:  Hargreaves Lansdown reports revenue rise as it adds 30,000 new clients

Why it's interesting

Despite the pick-up in new business – which Hargreaves attributed to "increased client numbers, the positive market environment and wealth consolidation onto our platform", as well as operational issues suffered by a competitor – analysts were not rushing to recommend Hargreaves.

Liberum reiterated a "sell" recommendation, noting "increasing competitive pressures and possible regulatory intrusion" by the Financial Conduct Authority as a result of its Platform Review.

"As a business, we rate Hargreaves Lansdown highly, however we are concerned that these possible headwinds are not adequately reflected in the share price," said analyst Justin Bates.

Barclays, on the other hand, recommended that investors "overweight" Hargreaves' stock as it noted the "measured roll-out" of the new regular cash savings service Active Savings.

Analysts at Shore Capital predicted that the company would be "sensitive to market movements", and recommended that it would provide a good opportunity for investors if the shares dipped today.

Read more:  Hargreaves Lansdown cuts dividend expectations as City regulator demands it ups its regulatory capital surplus

What Hargreaves Lansdown said

"I'm pleased to report another strong period of growth for Hargreaves Lansdown for client numbers, revenue and profit," said Chris Hill, the company's chief executive.

We have a significant market opportunity with a clear strategy focused on our clients' needs and offering great value and service to them.

"Our aim of making it easy and efficient for clients to manage their savings and investments in a secure environment and empowering them to save and invest with confidence is at the heart of our business, and was reflected in our continued growth during the first half of our 2018 financial year."