Bell Potter initiates coverage of Netwealth with 'hold' rating
Make us a preferred source
Make us a preferred source on Google
The news: Bell Potter initiated its coverage of investment platform Netwealth with a 'hold' recommendation, forecasting a FY25 "underscored by investment and profitable growth".
The numbers: Bell Potter opened coverage of the stock with a target price of $23.90. Netwealth shares were up 0.77% to $24.76 by 11:10am AEST, having climbed more than 60% since January.
Bell Potter analyst Hayden Nicholson noted that Netwealth provided unaudited funds under administration (FUA) net inflows of over $1.2 billion for July. It also reported "significant" new client wins representing 77.3% growth compared to the previous corresponding period.
Bell Potter forecasts an EBITDA margin expansion of 0.5 percentage points in FY25, driven by FUA net inflows and asset growth.
The context: Nicholson said that extrapolating July's performance as a monthly average would indicate "near-record achievement" in a seasonally soft quarter.
He noted that Netwealth and ASX rival Hub24 "look to trade on similar multiples", and expects both companies to benefit from adjacencies, with upside risk to Bell Potter's flow assumptions, predicated on emerging technologies and the value proposition.
What they said: "While we see [Netwealth] as a favourable candidate for leading net inflows, and to that end double-digit FUA market share, we are acutely aware of valuation and see the outlook for a strong pipeline as priced in," Nicholson said.
The source: Bell Potter research
