Twitter icon Email alerts icon Latest News RSS icon Magazine icon Stay connected:

View the article online at http://citywire.co.uk/wealth-manager/article/a722775

Is it time to back next stage of Brewin turnaround?

by Elsa Buchanan on Dec 05, 2013 at 10:59

Is it time to back next stage of Brewin turnaround?

Brewin Dolphin’s strategy to improve profitability and make the business more efficient looks like it starting to pay off.

A £4.8 million outlay on redundancy costs, and an additional FSCS levy of £1.1 million weighing on pre-tax profit which was down 4% on the year to £28.6 million. Nonetheless, the national wealth manager has reaped the rewards of moving to a unified pricing structure with a 25% fee rise to £152 million over the year. After a strategic review in 2011 under old chief executive Jamie Matheson to make the group 'leaner', Brewin said it was on track to achieve an operating margin of 25% by the end of the financial year in 2016. Its strategy is underpinned by initiatives to improve market competitiveness and drive organic growth, lower costs and achieve operational efficiency.

Analysts have welcomed the progress Brewin Dolphin has made so far alongside the market - with a 48.5% share price over the past year to 282.9 pence - but should investors back the next stage of the company's turnaround?

Canaccord Genuity analysts Robin Savage and Arun Melmane remain positive on the new management's prospects, upgrading Brewin Dolphin from a hold to a buy and increasing its price target to 304p from 285p.

This is a far cry from October, when the analysts downgraded the stock to a hold in expectation of lukewarm results.

At the time, they had demanded more clarity from Brewin, particularly following the closure of three of its branches in Inverness, Hereford and Teesside - a move aimed at bringing about greater efficiencies and cost savings in the business.

The analysts noted: ‘These results and the accompanying investor presentation confirm that management are on track to meet our forecasts and achieve a 25% earnings before interest and tax (Ebit) margin in 2016.’

They were 'particularly impressed' by the quality of Brewin's assets under management, pointing to 14% of sitting in portfolios over £5 million for 250 high net worth families.

RBC Capital Markets also reacted positively to the results, upgrading its rating on the stock to an ‘outperform’ and raising its price target to 310p on 25 November.

Increased dividend forecasts

Brewin Dolphin’s board upped the final dividend by 40% to 5.05p, and increased the full year dividend by 20% to 8.6p.

Sign in / register to view full article on one page

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

Sponsored Video: Bringing it all back home


As the UK coalition government strives to rebalance the national economy, so called 'reshoring' looks set to play an increasingly important role in economic recovery.

Today's top headlines

Sponsored Video: Barings on investing in Frontier Markets


From Nigeria to Pakistan and from Kenya to Kuwait, frontier markets are catching investors' attention as never before.

More about this:

Look up the shares

  • Canaccord Genuity Group Inc
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Brewin Dolphin Holdings PLC (BRW.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

More from us

Archive

On the road

Click here to find out more from the Audience Development team.

Sorry, this link is not
quite ready yet