Hargreaves Lansdown PLC downgraded to “sell” by Citi, which prefers Quilter

() has “very strong current operating momentum” according to Citigroup but the US broker wonders how much better it can get.

Citi downgraded the stock to ‘sell’ from “neutral”, citing a current valuation that is above the historical average. The new target price is 1,560p.

The online wealth management platform has had a good run during the pandemic, with savers channelling cash that might otherwise have been spent on holidays or socialising into investment products sold by Hargreaves Lansdown but Citi reckons that revenues are more likely to fall next year than to rise.

“Net new business is likely to slow from the exceptionally strong 11.5% annualised growth rate over Jan-Apr,” Citi said.

“We are constructive on UK wealth secular growth, which we see as one of the few credible structural growth stories within European financials. As the leader in the UK D2C [director-to-consumer] platform market, HL is well-positioned to benefit from the trend of off-platform assets moving onto platforms but we prefer to play UK wealth via intermediary peer Quilter, which is a self-help driven recovery story with more catalysts,” Citi concluded.

Shares in Hargreaves Lansdown were down 1.3% at 1,659p in mid-morning trading.