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On Tuesday, Deutsche Bank (ETR:DBKGn) updated its financial outlook on AJ Bell (AJB:LN), raising the price target from £4.80 to £5.20 while reiterating a Buy rating on the stock. The adjustment comes in the wake of AJ Bell’s recent H125 results, which prompted the bank’s analysts to revise their earnings per share (EPS) forecasts upward by a mid-single digit percentage.
The analysis by Deutsche Bank suggests that AJ Bell presents an appealing investment opportunity, characterized by growth at a reasonable price. The firm’s valuation is cited at approximately 17 times the forecasted FY26 earnings per share, with an expected annual EPS growth rate of 17% from FY24 through FY28.
The updated forecasts take into account several factors, including guidance on increased revenue margins, which is seen as a positive development. However, this is tempered by expectations of higher cost growth, which analysts believe is mitigated by the revenue margin guidance. Additionally, the incremental wind-down of AJ Bell’s non-platform business is viewed as marginally negative. The revised price target also reflects market changes since the last update, which are perceived positively.
Deutsche Bank’s outlook on AJ Bell remains optimistic, with the Buy rating indicating confidence in the company’s future performance. The bank’s analysis underscores the potential for consistent growth in AJ Bell’s earnings, supported by favorable revenue margins and market conditions.
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