St. James's Place shares soar 25% on strong half-year results

Investing.com -- St. James’s Place (LON:SJP) shares surged by 25% on Tuesday after the company reported its impressive half-year results. The company reported a solid performance across key metrics, including growth in funds under management and the client base.

The wealth manager reported a record £181.9 billion in funds under management, reflecting both organic growth and positive market conditions. SJP also reported net inflows of £1.9 billion, demonstrating continued client confidence.

SJP's flows exceeded expectations, driving a beat on net cash results and EEV NAV/share, said analysts from Jefferies in a note. The unchanged provision for evidence of ongoing services is seen as a positive, as any increase would have negatively impacted the stock.

The new CEO's outlined goal to double the net cash result by 2030 through a 15% reduction in addressable costs is considered realistic and achievable. Jefferies believes this plan, coupled with anticipated revenue acceleration from the new fee structure, will drive long-term growth.

The targeted £100 million in cost reductions by 2027, coupled with reinvestment plans, is expected to bolster the company's financial position and accelerate profit growth from 2027 onwards.

The stability of the provision for legacy advice issues is another positive factor, said analysts at RBC Capital Markets. This underscores SJP's proactive approach to managing potential risks.

Jefferies values SJP using a DCF model based on the underlying cash result, arriving at a valuation of £14.60. While flagging potential risks such as regulation and competition, the brokerage maintains a positive outlook for the company.

RBC rates the stock as “Sector Perform” with a price target of GBP 550.

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