Broker snap: Hargreaves' first half in line, says Peel Hunt

LONDON (ShareCast) - The interim results from investment firm Hargreaves Lansdown were bang in line with expectations, according to Peel Hunt. The broker, however, has reiterated its hold rating and 450p target price on the group, saying that the stock is trading a big premium to its peers. The group's adjusted pre-tax profit in the first half rose by 21% to £72m (Peel Hunt's estimate was £72.3m), while earnings per share increased by 24% to 11.3p. "Although market conditions were challenging during the period, Hargreaves continues to deliver an impressive trading performance. New business in the period was £1.16bn, lower than the comparable year but a good performance nonetheless," said analyst Stuart Duncan Peel Hunt says that the stock is currently trading on an annualised "December 2012 EV/NOPAT" (enterprise value over net operating profit after tax) multiple of 17.2, well ahead of the wealth management sub-sector average of 12.3. While the broker expects a three-year compound earnings growth of 19%, higher than the sector average, some issues still remain: "against this, the uncertainty remains the potential impact of changes to the charging structure as a result of the FSA's latest thinking on platform remuneration. With little clarity emerging, we therefore retain our hold recommendation for now," Duncan said. BC