Shares in advice giant St James’s Place are “irrationally” undervalued given the firm alone makes up 12 per cent of the advice market, analysts have said.
SJP had £96.6bn in assets under management in August and is expected to surpass £100bn when it releases its interim report on Q3 later this month.
Shares in the firm closed at 1,039p last night, close to 20 per cent down on their 52-week high of 1,279.5p.
In a research note this morning, investment bank and stockbroke Panmure Gordon says the continuing slide of SJP share prices is in line with falling indexes, but are now well undervalued.
The broker says: “The share price has been impacted by the recent fall in investment markets, but in our view this has created an excellent buying opportunity given the valuation and a 2019 forecast dividend yield of 5.5 per cent.”
Panmure Gordon estimates gross inflows of £4.1bn, up 14.2 per cent and net flows of £2.6bn, up 10.2 per cent from 2017 ,in SJP’s upcoming third quarter results for this year.
As that release nears, SJP investments managing director David Lamb and partnership managing director Ian Gascoigne are increasing their stake in the business.
Panmure also says reports of a cut to pension tax relief in the Autumn Budget on 29 October are not likely to impact SJP’s performance.
The broker says a reduction on the annual allowance from £40,000 to £30,000 may bring in more business as people look for more pensions advice.
Panmure says: “We think that [SJP’s] outlook for growth is very positive. We suspect this could only service to increase demand for SJP services.”
The broker says SJP is maintaining its own 12-20 per cent per annum medium to long-term growth forecast.