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Investing.com - UBS downgraded Hub24 Ltd . (ASX:HUB) from Buy to Neutral while raising its price target to AUD112.00 from AUD105.00, citing valuation concerns despite a positive long-term outlook.
The downgrade follows Hub24’s FY25 UNPAT (underlying net profit after tax) results, which beat expectations but primarily due to lower-quality factors such as tax rate adjustments. UBS noted an EBITDA miss in the company’s key Platforms division resulting from weaker revenue margins.
UBS remains optimistic about Hub24’s longer-term prospects, forecasting cumulative flows 16% above consensus estimates through FY30 and projecting FY26-30 EPS growth of 19% annually driven by operating leverage.
The firm believes Hub24’s valuation has "run too hard," currently implying below adequate investor returns of 6-7% annually, with the company’s PE relative valuation 29% above its historical average.
UBS acknowledged that rising equity markets may be cyclically benefiting both Hub24’s valuation and flows, suggesting that any market normalization could provide a more attractive re-entry point to what it still considers a secular growth story.
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