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BofA Securities initiated coverage on Rathbones Group PLC (LSE:RAT) (OTC:RTBBF) with a buy rating and a price target of GBP22.50, representing a 35% potential upside from current levels.
The UK wealth and asset manager is trading at approximately 10 times 2026 estimated price-to-earnings ratio, a 19% discount to its five-year average, according to BofA Securities. The firm believes this valuation fails to account for Rathbones’ acquisition of IW&I, which increased funds under management and advice by 67%.
The migration of IW&I is scheduled to complete in the first half of 2025, with net flow recovery and realization of most synergies expected in the second half of 2025. BofA Securities projects these developments will drive operating margin expansion to 28.4% in 2026, compared to the consensus estimate of 27.7%.
BofA Securities expects Rathbones’ wealth and asset management net flows to benefit from equity market momentum, softening interest rates, and reallocation from U.S. to European equities.
The acquisition has positioned Rathbones as one of the largest UK wealth managers, with the company now trading at what BofA Securities considers a significant discount to its historical valuation despite the transformational growth in its business.
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