Full-year profit growth forecast shortfall weighs on Hargreaves
UK FINANCIAL adviser Hargreaves Lansdown yesterday saw its share price fall by almost six per cent after it reported that full-year profit growth was lightly short of expectations.
While revenues rose eight per cent to £291.9m, they were short of the £342m expected by the market. Pre-tax profit, up seven per cent at £195.2m, lagged by about £15m.
It made the most of a buoyant equity market by attracting plenty of new business, helping justify analysts’ “buy” ratings and a relatively high stock valuation.
However, investors are concerned that the UK’s Retail Distribution Review (RDR,) aimed at making fees more transparent. could cut its profit margins.
Hargreaves Lansdown has spent 18 months implementing the changes and said it would now focus on expanding its business.
Describing the results as a “small miss”, Jamie Constable, a partner, equity sales at N+1 Singer, said the share reaction was a combination of a “punchy” valuation and some near-term uncertainty about margin pressure as a result of RDR.
Shares closed down 5.79 per cent at 1,073p.