It might be seen as a case of results-day corporate-speak that Mark Fitzpatrick could describe the first three months of the year as “good” for St James’s Place.
Some 30 per cent was wiped off the value of Britain’s biggest wealth manager in a day in February after the bosses revealed it had set aside £426m to deal with a historic overcharging scandal.
Shares in the company are now languishing at nearly their lowest level in a decade and the boardroom is grappling with both nervous investors yanking cash from funds and the hefty costs of an overhaul to its fee structure, pushed through in October after pressure from regulators.
In a first quarter trading update today, the FTSE 100 money manager reported a sharp slide in in flows to £710m, down from £2bn in the same period last year, and below market expectations of £900m.
Fitzpatrick’s “good” reading of the quarter came on the back of a rise in funds under management to £179bn – reflecting a “strong investment return” – and growth in its client and adviser base.
And despite the noise around the beleaguered money manager, some City analysts are backing that view.
In a note to investors today, brokers at Jefferies doubled down on their buy rating for St James’s Place and said that while a potential wave of refunds represented a “question mark” for the stock, adviser and client growth signalled something positive in the longer term.
“The new CEO reports that projects reviewing client service records and plans to change the charging structure are progressing as expected,” Jefferies analyst Julian Robert said. “We also note that adviser numbers continue to increase, which we see as a sign of health, despite difficult market conditions for flows.”
They set a target price of 820p for the firm. Shares in SJP are currently languishing at around 436p.
Analysts at UBS have similarly said buy on the back of the better-than-expected investment return, which they argue could “may help with flows going forwards”. Numis wonks struck a more cautious tone, saying that given the regulatory uncertainty around the company, they “see no rush to own the shares shorter term.”
That uncertainty has dogged more than just St James’s Place in recent months. The FCA’s sweeping consumer duty changes have triggered a rethink across scores of money managers, with rival Quilter calling in a review of its own practices last month.
Combined with investor nerves against and a squeeze on savers and investors, firms across the industry have suffered.
But in a note to investors today, investment bank Panmure Gordon said the opportunity around St James’s Place in particular is clear.
“This company delivered faster growth than its wealth management peers with a product range believed to be opaque, overly complicated and over-priced,” said Panmure analyst Rae Maile. “Imagine, therefore, the potential with pricing which is clear and comparable.”
While it is “in the doghouse with the stock market”, they say the rise in customers and advisers tells a different story. So Fitzpatrick’s read of the quarter may appear generous, but analysts seem to see some weight to it.
