Wealth Manager - the site for professional investment managers

Register to get unlimited access to Citywire’s fund manager database. Registration is free and only takes a minute.

Brewins £32m tech hit: what the analysts said

Brewins £32m tech hit: what the analysts said

Royal Bank of Canada was one of a series of brokers to maintain its outlook on Brewin Dolphin yesterday after the investment manager said it would write down £32 million in IT costs.  

RBC Capital Markets analyst Peter Lenardos pointed out that the pre-tax impairment charge would leave the capital position unchanged, ‘but the £32 million loss could be negative for sentiment’.

Shares in Brewin Dolphin ended yesterday 2.26% down at 320p. RBC has the company on an outperform rating with a price target of 327p. 

Canaccord Genuity reaffirmed its hold rating on the stock and its 304p price target. N1 Singer held the business at a buy with a 324p target, while Numis maintained its hold with a 350p target.

Analysts followed by Reuters rate the business a hold over a buy by a 2:1 margin, with a median current price target of 318p.  

An outstanding £15 million of charges remained to settled over the next 10 years, but Lenardos said in his view ‘the most likely outcome is the non-payment of the £15 million’.

He added that on the upside Brewin Dolphin’s profit margin before tax this year was likely to exceed the company’s target of 20%.

‘While £32 million and potentially £15 million more has been wasted, we would rather that the issue be identified and addressed now as opposed to at the project's conclusion,’ said Lenardos.  

‘We believe the phased-in approach allowed the company to test the system before a broader rollout occurred.

‘Since the company trades at 15.4 times 2015 earnings per share, a premium to the diversified financials sector at 13.5 times, we believe it faces a risk of derating. However, we emphasise that there is no impact on our financial forecasts… the business appears to be performing ahead of guidance and our forecasts.’


 

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
CIO Tapes 2: two warnings and a lot of optimism

CIO Tapes 2: two warnings and a lot of optimism

Our group of leading asset management CIOs see a lot of opportunities – and overseas investors are buying UK too

Play Wealth Manager Retreat 2017: size isn't everything

Wealth Manager Retreat 2017: size isn't everything

We asked our delegates at the Wealth Manager Retreat what they think about the recent wave of consolidation in the industry.

1 Comment Play CIO Tapes - part 3: 'passive funds are anti-capitalist'

CIO Tapes - part 3: 'passive funds are anti-capitalist'

Citywire recently gathered three of the UK's leading fund investment heads to discuss their hopes, fears and the issues that their jobs throw at them daily.

Read More
Your Business: Cover Star Club

Profile: Thomas Miller explains its post-restructure plans

Profile: Thomas Miller explains its post-restructure plans

Thomas Miller Investment’s (TMI) head of wealth Matt Phillips has strong opinions about many things

Wealth Manager on Twitter
Managing risk, unearthing returns
  • A-rated Beagles sells down Brewin Dolphin
  • Electoral Commission reopens Vote Leave probe
  • City grandee says HBOS crisis 'worst moment' of his career
  • Ex-OMGI duo enters model portfolio market with new boutique
  • Abolish stamp duty: six wealth managers' Budget wish lists
  • James Carthew: is the Japanese glass half full, empty, or illusory?
  • The Expert View: William Hill, Mitie and Xaar
  • Overnight Markets: Tech shares buoy Wall Street
  • Tuesday Papers: May told to exploit Merkel crisis to reduce Brexit bill
  • Investors brush off German government worries
  • Buy-to-let crackdown? Charles Stanley's 5 Budget calls
  • Brewin Dolphin's south west assets hit £1bn
  • Wealth Manager Top 100 2017: seven hidden fund talents to watch
  • Read More
    -->