5 big analyst AI moves: Nvidia guidance warning; Snowflake, Palo Alto upgraded
On Tuesday, AJ Bell (AJB:LN) shares faced a downgrade in their stock rating from 'Neutral' to 'Sell' by analysts at Citi, coupled with a reduction in the price target from GBP4.50 to GBP3.90. The move comes as a response to expected market shifts and earnings projections.
Citi analysts pointed to AJ Bell's impressive market share gains and asset under administration (AUA) growth that have previously led to positive consensus upgrades. Nonetheless, they foresee potential challenges ahead, particularly with anticipated price reductions from AJ Bell's largest direct-to-consumer (D2C) competitor, which may decelerate AJ Bell's growth trajectory.
A key concern raised by the analysts involves AJ Bell's earnings from client cash balances, which represent approximately 13% of the firm's D2C AUA. Citi predicts a decline in this area, suggesting that a 2 percentage point reduction could present a 15% headwind to earnings per share (EPS). The analysts have positioned their EPS estimates 10-20% below the market consensus and have revised their 2027 EPS forecast downward by 5%.
The revision of the price target to GBP3.90 from the previous GBP4.50 reflects these concerns and the analysts' outlook on the company's financial health. The downgrade to a 'Sell' rating indicates a cautious stance on the stock's future performance in light of the expected market dynamics and internal revenue challenges.
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