Hub24 shares extend gains as Q2 result impresses UBS, Citi
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The news: Hub24 extended gains in morning trade after the investment platform reported net inflows of $5.5 billion for the December quarter, comfortably beating forecasts by Citi and UBS.
The numbers: Hub24 shares were up 4.7% to $76.13 by 11:30am AEDT, having closed 11% higher after posting its Q2 result on Tuesday.
Hub24's net inflows of $5.5 billion beat UBS' forecast of $4.7 billion and consensus estimates of $5 billion.
UBS kept its 'neutral' rating on Hub24 and raised its price target from $70 to $75.50. It also increased its earnings-per-share forecasts by 4% in FY25 and 8% in FY26, reflecting the Q2 update.
Citi said Hub24's underlying flows of $4 billion, excluding $1.5 billion of large migrations from Equity Trustees, came in 9% ahead of its estimates.
Citi retained its 'neutral' rating, upgraded Hub24's full-year net flow forecast by 8% to $18.8 billion, and lifted its target price on the stock by 1% to $74.50.
The context: UBS noted that Hub24's second quarter headline net flows were its largest on record and beat expectations, with large client migrations landing and strong organic net flows coupled with solid adviser growth.
Citi said that Hub24's funds under administration (FUA) of $120.9 billion, which topped consensus estimates by 2%, benefited from positive market movements, particularly in international equities and a weaker Australian dollar.
However, Citi flagged the closure of Hub24's Xplore Wealth managed discretionary account (MDA) service, which currently holds around $2 billion in FUA. The analysts noted the move will likely see those funds move away from Hub24 and raise questions over the company's mergers and acquisitions strategy.
The sources: UBS research, Citi research
